EN EN

EUROPEAN COMMISSION

Brussels, 9.12.2015

SWD(2015) 270 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

to ensure the cross-border portability of online content services in the internal market

{COM(2015) 627 final}

{SWD(2015) 271 final}

Table of content

1. CONTEXT .................................................................................................................. 3

2. WHAT IS THE PROBLEM AND WHY IS IT A PROBLEM? ................................. 4

3. WHY SHOULD THE EU ACT? .............................................................................. 19

4. WHAT SHOULD BE ACHIEVED? ........................................................................ 22

5. WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES? ..... 23

6. WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND

WHO WILL BE AFFECTED? ................................................................................. 26

7. HOW DO THE OPTIONS COMPARE? .................................................................. 45

8. THEREFORE, THE PREFERRED OPTION IS OPTION 3. HOW WOULD THE

ACTUAL IMPACTS BE MONITORED AND EVALUATED? ............................. 48

9. ANNEX 1 – PROCEDURAL INFORMATION ...................................................... 50

10. ANNEX 2 – STAKEHOLDER CONSULTATION ................................................. 52

11. ANNEX 3 – WHO IS EFFECTED BY THE INITIATIVE AND HOW ................. 59

12. ANNEX 4 – COPYRIGHT, SPORTS RIGHTS AND THE CONTENT

INDUSTRIES IN THE EU ECONOMY .................................................................. 61

13. ANNEX 5 – NEW TECHNOLOGIES, NEW WAYS OF ACCESS TO AND

DISTRIBUTION OF CONTENT ............................................................................. 66

14. ANNEX 6 – INTERNATIONAL AND EUROPEAN LEGAL FRAMEWORK .... 72

15. ANNEX 7 – EXAMPLES OF ACCESS OR USE RESTRICTIONS IN TERMS OF

SERVICES BY ONLINE CONTENT PROVIDERS ............................................... 75

16. ANNEX 8 – TECHNOLOGIES FOR DELIVERING ONLINE CONTENT

SERVICES ................................................................................................................ 81

17. ANNEX 9 - GLOSSARY .......................................................................................... 85

3

1. CONTEXT

The digital economy has been a major driver of growth in the past two decades, and is

expected to grow seven times faster than the overall EU GDP in coming years.1 Under

the political guidelines of the European Commission, adapting the current EU copyright

rules to the realities of the Digital Single Market (DSM) “in light of the digital

revolution, new consumer behavior and Europe’s cultural diversity” is one of the

flagship projects for the next years.2 In particular, the DSM Strategy

3 puts forward a

range of initiatives, among others, in copyright with the objective of creating an internal

market for digital content and services. It calls for addressing a set of key obstacles to the

functioning of the DSM, including allowing wider online access to copyright-protected

works by users across the EU. The Strategy however also recognizes that these obstacles

are very different in scope, nature and complexity; therefore it endorses a step-by-step

approach.

This Impact Assessment report (IA) accompanies a self-standing initiative to enhance the

cross-border portability of online content services in the DSM. This is one of the first of

those initiatives under the DSM Strategy that aim at facilitating access to digital content,

in particular by removing the barriers that currently stop consumers, when travelling in

the EU, from accessing services they subscribed to or digital content they have purchased

or rented in their home Member State (MS).Cross-border portability is a specific aspect

of the broader discussion on access to services across borders where currently there are

ongoing consultations both as regards the rules applicable to satellite broadcasting and

cable retransmission services4 and, more generally, to services

5. The problems with

cross-border portability however are specific and they necessitate a specific solution (as

explained later in this IA). They could not be addressed and resolved by the above or any

other initiative under the DSM Strategy. In particular, the ongoing review of the Satellite

and Cable Directive6 has a different scope (e.g. as regards the relevant services).

Moreover, limited or no access of consumers in a MS to online content services provided

in other MS7 is a situation that is very different from cross-border portability (as

described above). The former would require a different legal solution and would have

different economic impacts. These issues are not addressed in this IA.

Specific early intervention on the cross-border portability of online content services is

also timely now that consumers are nearing the date where there will be an end to

roaming charges for travelers within the EU8.

This initiative will be followed by others regarding the further areas identified in the

DSM Strategy9.

1 https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/FI3P%20Fact%20Sheet.pdf

2 http://ec.europa.eu/about/juncker-commission/docs/oettinger_en.pdf 3 Communication from the Commission "A digital single market strategy for Europe", 6 May 2015,

http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf 4 Consultation on the review of the Satellite and Cable Directive, https://ec.europa.eu/digital-

agenda/en/news/consultation-review-eu-satellite-and-cable-directive 5 https://ec.europa.eu/eusurvey/runner/geoblocksurvey2015/ 6 Directive 93/83/EEC 7 Also referred to as "cross-border access" or "geo-blocking". 8 http://europa.eu/rapid/press-release_IP-15-5265_en.htm 9 The interplay of this initiative and the draft legislation on digital contract has been examined and their

consistency ensured.

4

2. WHAT IS THE PROBLEM AND WHY IS IT A PROBLEM?

With growing access to the internet digital has become, for many, the main way to enjoy

content such as music, games, films or sport and a means to participate in society. More

and more consumers access content online: between 2009 and 2013, consumers'

spending increased by 86% on digital music downloads and by 413% on streaming10

.

Today there are close to 600 online music services in Europe.1112

The same trend is

observable for video: consumers' spending on digital video increased by 400% between

2010 and 201313

. In 2014 there were more than 3000 video-on-demand (VOD) services

in Europe, including catch-up TV services of broadcasters (1196 services) and VOD

services providing access to a catalogue of programs (2101 services).14

In 2014,

subscription VOD services had 25 million users in 14 EU MS.15

16

In 2013 the online on-

demand TV revenues reached €938 million and online on-demand film revenues €588

million in the EU.17

As regards e-books, Europeans have embraced them only to a limited

extent so far: sales of e-books in Europe accounted for 7% of the global digital sales (a

total of €8.1 billion in 2014). A trend towards more digital revenues is forecasted for the

coming years but these remain far behind revenues from hard copies.18

In Europe

consumer spending on video games is estimated at more than €20 billion in 2015, out of

a global market of €68 billion. The number of active social network game users rose in

Europe from 17 million a month in 2008 to 376 million a month in 2013.19

Furthermore,

58% consumers in the EU access live events (such as sports, concerts, etc.) online.20

Online sports consumption is also growing globally, including in the major European

markets.21

22

Online content services (for the purposes of this IA: services giving access over the

internet to copyright-protected content such as films, music, e-books or games and to

radio and TV programs) provide viewers with flexibility when watching audiovisual

(AV) programs, including sports events, listening to music, reading books or newspapers,

by giving them vast catalogues to choose from and the possibility to access such content

at the time of their choice.23

Tablets and smartphones further facilitate such uses by

providing access from wherever the viewers are. Smartphone penetration has almost

doubled in Europe in the last two years and the use of tablets has increased from 18% in

10 PWC Global entertainment and media outlook 2014-2018 (data available for 18 EU MS) 11 http://www.pro-music.org (September 2015), see also Annex 5. 12 Figures are not available on the value of the EU digital market. The global digital revenues of the

recording industry reached USD 6.85 billion in 2014. IFPI Digital Music Report 2015 13 European Video Yearbook 2014, International Video Federation (IVF);

http://www.ivf-video.org/new/public/media/Europe_2014.pdf 14 N.B. The data used in the problem definition on VOD services per MS are from a 2013 study. 15 AT, BE, DE, DK, ES, FI, FR, IE, IT, LU, NL, PT, SE, UK 16 IDATE Digiworld Yearbook 2015, Audiovisual Observatory and IHS. 17 Audiovisual Observatory 18 IDATE Digiworld Yearbook 2015 19 http://www.isfe.eu/ and IHS 20 2015 DSM consumer survey: identifying the main cross-border obstacles to the Digital Single Market

and where they matter most. More specifically, over 50% consumers in FR, DE, IT, ES and GB

consume sports content online, including streaming live sport events; see Global Sports Media

Consumption Report 2014. 21 See Global Sports Media Consumption Reports 2012 and 2014, which cover FR, DE, IT, ES and GB. 22 For further economic data see Annexes 4 and 5. 23 This IA extends to online content services. It does not cover satellite broadcasting services etc. as the

Satellite and Cable Directive (Directive 93/83/EEC) is currently under review. The public consultation

runs until 16 November 2015 and contains questions (e.g. Q2, Q2.2 and Q4) relevant to the cross-

border portability of such services. This initiative therefore should not pre-empt the results of the

consultation and the assessment of the different options in that area.

5

2012 to almost 50% of households in 201424

. In 2012, 36% of individuals in the EU used

a mobile device to connect to the internet. In 2014, this share has risen to 51%.25

26

In

2012, 14% of individuals in the EU used a mobile device for reading or downloading

news and 12% for playing games, watching images, video or listening to music.27

28

Online content services rely predominantly on content that is protected by copyright

and related rights,29

e.g. films or music. However these services may also include

content that is not necessarily protected by copyright, the most notable example being

sporting events. At the same time, when sporting events are broadcast, broadcasting

organisations can invoke rights in such broadcasts under EU copyright law.

Providers of online content services wanting to use copyright-protected content need to

get a licence from the holders of the rights30

in the content they want to use and for the

territories in which they want to provide the services. The manner in which online rights

are licensed depends on the type of content and the category of right holder. For

example, rights in AV content are normally licensed by AV producers and, as far as

premium AV content31

is concerned, on an exclusive territorial basis, whereas rights in

music are licensed in part by record producers and music publishers and in part by

authors' collective management organisations (CMOs) and, normally, without territorial

exclusivity.

The rights to transmit sporting events, i.e. the authorisation given by a sports organiser

to a broadcaster (to be distinguished from the rights the broadcaster has in broadcasts

itself – see above) or to another service provider so that they can transmit the sporting

event to the public, further referred to as “sports broadcasting rights”, are often sold

jointly, in particular when sport clubs entrust national or international sport associations

to sell these rights on their behalf.32

As indicated by the Commission's decisional practice

in competition cases,33

in a number of EU markets premium sports content broadcasting

rights are sold in open tenders and in packages.34

However, such selling practices are not

yet spread in all EU markets: there are markets where rights are sold in one bundle

24 Source: Ericsson mobility report appendix, Europe, November 2014 (data: Ericsson ConsumerLab

research from 2014) 25 http://ec.europa.eu/eurostat/statistics-explained/index.php/Information_society_statistics_-

_households_and_individuals 26 Almost 60% of consumers use multiple screens to perform the same digital activity (i.e. change

devices according to their location during the day). Ericsson mobility report appendix, Europe,

November 2014. 27 Source: Eurostat 2012 28 Globally, 61% of consumers watch TV & video on their smartphones, an increase of 71% since 2012.

http://www.ericsson.com/res/docs/2015/consumerlab/ericsson-consumerlab-tv-media-2015-

presentation.pdf 29 "Copyright" is used in this document to encompass copyright (the right of authors) and related rights

(the right of performers, producers and broadcasters). 30 "Holders of rights" or "right holders" are used in this document to denote holders of copyright and

related rights as well as sports organisers who hold rights to broadcast sporting events. 31 Content that is the most attractive in commercial terms, e.g. new films and series. 32 E.g. broadcasting rights to football clubs matches are mainly sold collectively, the International

Olympics Committee (IOC) is the owner of the global broadcast rights for the Olympic Games, see

http://www.olympic.org/olympic-broadcasting. Broadcasting rights may also be marketed individually

by sports organisers. See Annexes 4 and 5 for further details on sports. 33 See cases COMP 37.398 (UEFA Champions League, 2003), COMP /37.214 (German Bundesliga,

2005), COMP/38.137 (FA Premier League, 2006). 34 In the FA Premier League case (COMP/38.137), the Commission also imposed on the collective

selling entity a no single buyer obligation, to avoid that all broadcasting rights are consolidated by one

buyer.

6

without a tendering process.35

Premium sports content is routinely marketed on an

exclusive territorial basis. Non-premium sports content may be licensed by sports

organisers without geographic restrictions.36

At EU level, there is a significant body of legislation that applies to the provisions of

online content services including copyright and related rights, audiovisual media services

and broadcasting. The legal framework is explained in Annex 6 in detail.

Problem tree

Cross-border portability, or the absence of it, concerns online content services to which

consumers have lawful access (whether in exchange for a payment or free of charge), or

content that they purchased or rented online in their country of residence and to which

they want to continue to have access when travelling in another MS.

It is one of the issues identified in the DSM Strategy and it is a question separate from

the discussion on cross-border access by consumers to online content and to online

content services which are available in MS other than their own. Cross-border portability

and possible other initiatives under the DSM Strategy will eventually complement each

other in removing barriers to the functioning of the DSM. They are however different

and need to be addressed separately. An initiative on cross-border portability does not

pre-empt any decision as regards other DSM-related initiatives but those initiatives

would not be able to resolve the problem with cross-border portability either. Therefore,

they will be addressed subsequently. The problem identified in the context of cross-

border portability is summarised in Figure 1 below. Its drivers are related to contractual

practices and, as far as copyright-protected content is concerned, to copyright law. There

are significant differences between the sectors of the content industries. As a result, the

scale of the problem varies depending on the sector.

35 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014, p 94. 36 Ibid.

7

Figure 1: Problem tree

Description of the problem

When using online services, consumers either purchase37

or rent38

content on a one-off

basis ("transactional services", e.g. those services provided by Amazon or iTunes where

particular films or songs are offered for purchase or rent) or they establish a longer-term

contractual relation with them ("subscription services", e.g. Netflix, Deezer or Skoobe).

In the case of transactional services, where a copy which is purchased by the consumer

is downloaded on the consumer's device (e.g. a film bought on iTunes and downloaded to

an iPad), the consumer may access such a copy anywhere and no issues related to

portability arise. The question of portability however arises where the content is

accessible via a digital locker or where it is streamed by the service provider, which is

typical for rental, as in these cases the access to content is not within the consumer's

control. Transactional services increasingly use streaming and/or cloud-based

technologies.

Subscription services give consumers access to an unlimited amount of content from the

provider's catalogue on an ongoing basis39

either upon payment of a monthly fee or, e.g.

where the service is supported by advertisers, free of charge. A typical feature of

subscription services is that they allow consumers to access content on different devices,

37 i.e. acquire the right to a digital copy of content which they download to their device and/or have an

unlimited access to, from e.g. a digital locker (online storage service for digital content, e.g. films,

music). 38 i.e. acquire the right to access content for a certain period of time (typically 24 to 48 hours). 39 Though, certain temporal limits may apply depending on the content, e.g. catch-up services of

broadcasters (i.e. services giving online access to content that has been previously aired on a TV

network) are typically limited in time (e.g. available for 30 days).

8

either on a program-scheduled or an on-demand basis.40

The question of portability arises

also in these services as content is normally streamed by the service provider.

In many cases, the access to these online content services is only possible in the MS of

the consumer/service provider. When consumers travel abroad, they often cannot, or

can only partially use the service that they have subscribed to in their home country or

they cannot access the online content that they have previously purchased or rented.

It is important to note that many online content services are freely accessible in the sense

that they do not involve any explicit contractual relation41

between the service provider

and the consumer or that they do not involve the verification of the consumer's MS of

residence.42

These services are out of the scope of this IA.

The presence and the scale of the problem is not the same in all sectors. While the

business models are changing and the consumer demand is rapidly increasing, the

description below captures the main features of the different sectors:

The problem is particularly present in online audiovisual (AV) services. In most cases

these services are not portable across borders at all. Consumers travelling in other MS

cannot access the service or the content to which they have lawful access in their home

country. This concerns both standalone VOD platforms and those operated by pay-TV

operators43

regardless of whether the services are subscription-based or transactional.

Examples:

A subscriber of HBO Nordic staying for some days in Italy will not be able to access his account and watch

films and will, instead, see a message saying that the service "is only available in Sweden, Norway,

Denmark and Finland".

The same will happen to users of the Belgian IPTV service Proximus TV Partout who can watch their

favourite TV channels on tablets and smartphones, but only in Belgium.

Similarly, the Internet TV platform Magine TV Germany, which encompasses both a limited unpaid

service and paid subscription services, is only available to users residing in and accessing the service from

the territory of Germany.

A French user of the transactional MyTF1 film and series service will not be able to rent a new film while

staying temporarily in the UK.

An Italian user of the transactional ChiliTV film and series service will not be able to rent and stream a

film while on holiday in Spain.

In some cases online AV services are partially portable. This can mean that A) only

content that the consumer previously downloaded (if the provider offers such a

possibility) to his portable device is available when travelling abroad44

or B) that a

consumer's access is limited to a selection of the content the service normally offers.45

C)

Partial portability can imply that only the content offered by the same service provider in

the visited MS is available. In this case, the availability of the service depends on the

40 Current Market and Technology Trends in the Broadcasting Sector, p.28.,

http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=307382 41 e.g. the acceptance of HTTP cookies (i.e. data sent from a website and stored in a user's web browser

while the user is browsing that website for purposes of notifying the website every time the user loads

the website of the user's previous activity on this website) will not be regarded as a contractual relation

for the purposes of this IA. 42 e.g.: http://www.rtve.es/television/, http://ninateka.pl/ (the vast majority of content),

http://www.btv.bg/videos/, http://www.rtbf.be/video/, http://www.vtuner.com/. 43 All major pay-TV services offer to their customers the possibility to access their programs away from

the main TV screen; most of them provide web portals and/or apps. Current Market and Technology

Trends in the Broadcasting Sector, p.28.,

http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=307382 44 e.g. Sky Go, Canal Play, Amazon Prime Video 45 Normally in the case of a broadcaster's own productions when it holds the rights in all EU MS.

9

presence of the online service provider in the visited MS46

and on the catalogue of

content offered in that MS47

, which may be very different from the one offered in the

home country (and in a different language or without specific features available in the

home country such as accessibility features for persons with disabilities).

Examples:

A) If a user of the transactional Universciné (Belgium) film service wants to watch an already rented film

while staying temporarily in the Netherlands, he has to download it before travelling – he will not be able

to rely on the streaming feature.

B) A subscriber of one of the main French online AV services - Canal Play - could benefit from its

"Summer to go" option allowing to download a selection of content and then watch it for 30 days.

Users of the German RTL Now TV service can access it using a PC, smartphone or tablet, but will have

only partial access to the content (mostly to RTL own productions) when they are outside of Germany.

C) A Dutch subscriber travelling to France will only be able to watch films offered by Netflix to French

consumers. The same subscriber travelling to Poland will not be able to watch films on Netflix as Netflix is

not available in Poland.

In the above cases, consumers are cut-off from their online content services or – in the

case of partial portability - significantly limited in their experience. Using services

offered in the visited country may not be an option as it may not be practical to enter into

a subscription when only visiting a country for a limited duration, the content may not be

available or available only in a foreign language, etc. and in any event this is not a

reasonable proposition from the consumer's point of view.48

Similarly to AV content, much of premium sports content made available online is not

portable across borders, in particular the streaming of live sporting events.49

As explained

above, the offers by broadcasters to watch their programs (including sports programs) on

the "second screen" are currently limited to the national territory. The same trend is

observed concerning broadcasters' standalone online services for sports.

Examples:

Viasat's Viaplay is one of Europe's first unbundled50 online TV sports services,51 available in Denmark,

Finland, Sweden and Norway. However, a consumer cannot login to his account while travelling in the EU.

Sky's Now TV is an online service offered by Sky in Italy, Germany and the UK, which includes

unbundled online sports offerings. These services cannot be accessed by consumers while travelling in the

EU.52

As a result of territorial restrictions, consumers can only enjoy the services of the

broadcaster/service provider they have subscribed to in their home MS and not when

travelling abroad.53

Again, consumers cannot easily replace their home services by

services available in the visited country as e.g. the desired content may not be available

46 N.B. only large players are present in several MS. e.g. Netflix is currently present in 15 European

countries, smaller Italian VoD provider ChiliTV is present in 5 European countries 47 For which the service provider has licences in the visited MS. 48 Further examples of terms of service from across the EU resulting in access or use restrictions are

presented in Annex 7. 49 Access to premium sports content, even though it may be available on the broadcasters'/service

providers' online platform, is usually not accessible when travelling to other MS. 50 i.e. sports-only as opposed to bundled with other elements of a TV program. 51 See IHS Technology, Television Media Intelligence Service, Insight Report - Sports Rights: Operators

Evolve the Pay TV Proposition as Costs Go Up, August 2015, p. 13. 52 Sky TV Now content shown in Germany can be watched also in Austria. 53 A recent survey shows that consumers who tried to access live events (including sports) online while

abroad experienced problems. According to 2015 DSM consumer survey: identifying the main cross-

border obstacles to the DSM and where they matter most, of the 38% of respondents who streamed

live events (e.g. sports matches) in the last 12 months and tried to access streaming services of their

own country while abroad, 51% reported not being able to access them.

10

at all in the visited MS, e.g. if that sport is not popular in the visited MS or not available

due to other preferences in that market54

. In particular, the offer of premium sports

content by other service providers can be limited. One specific feature of sports is the

value of live watching, i.e. consumers want to watch sports live and therefore, a delayed

viewing/listening, e.g. upon consumer's return via catch-up TV, is not a substitute. As for

watching other (non-premium) sports content, consumers may also experience problems

while travelling in the EU, as - even though there may not be territorial restrictions in

place - major pay-TV operators offer access to their programs away from home only in

the national territory.

In other content sectors, the cross-border portability of online services is more present.

In the music sector, consumers, when travelling, are normally able to access and use the

online music services to which they have subscribed in their home country.55

Therefore,

in practice, there seem to be no restrictions to the cross-border portability of online music

services. At the same time, the legal situation appears to be less clear as some end-user

agreements limit uses to the home country of the subscriber.56

There do not seem to be issues with the cross-border portability of e-books. Most online

services offer the possibility to download e-books to the reader's device57

(at present, this

is the typical use pattern in the sector). There are also more and more subscription-based

streaming services58

in the market. These are generally portable across the MS.59

Finally, streaming services that offer access to video games are also generally available

across borders. Subscription is not the main mode of access.60

The business models used

by video game providers include free to play online or free applications, models relying

on advertising and/or in-game sales of features enhancing the gamer's experience,

subscription-based as well as pay-per-download. It appears that the free to play model61

has been gaining ground at the expense of other models. Cross-border portability is

usually not restricted.

The scale of the problem in the AV sector and in sports coverage is important and it

continues to grow, partly due to the increasing number of online subscription-based

services and partly because of the increasing consumer demand.

54 E.g. if the team of the visited MS plays at the same time, the match of the consumer's MS may not be

broadcast, or if it is broadcast, it is likely to be without "home-specific" commentary or interviews. 55 E.g. a consumer can access his Spotify or Deezer account anywhere in Europe. See summary and

conclusions from the "Cross-border Access and the Portability of Services" Working Group of

Licences for Europe, which indicate that online music services are generally portable:

https://ec.europa.eu/licences-for-europe-dialogue/sites/licences-for-europe-dialogue/files/WG1-

Music.pdf 56 e.g. https://www.spotify.com/be-fr/legal/end-user-agreement/ 57 e.g. Amazon, Kobobooks 58 e.g. Skoobe (DE, ES), Izneo (FR, BE), Mofibo (DK, NL), ECI (BE), Yieha (BE), Youboox (FR),

Youscribe (FR), 24Symbols (DE, UK, IT, ES), Paper C (UK, DE), Elly's choice (NL), Multinova

(PT), Leia Comprazer (PT), Nubico.es (ES). 59 Information provided by the Federation of European Publishers, see e.g. http://www.fep-fee.eu/FEP-

attends-the-first-roundtable 60 E.g. http://www.ipdigit.eu/2015/03/business-models-for-digital-goods-video-games-free-to-play-

games/ and http://www.economie.gouv.fr/files/03-rapport-igf-igac-culture-economie.pdf. Multi-player

interaction as well as integration with social networks are important features of the video games

environment too (e.g. http://alliancenumerique.com/wp-content/uploads/2013/01/JRC60711-

GamesReport.pdf ) 61 It is often accompanied by advertising and/or in-game sales.

11

As regards the number of services, in 2013, 3087 on-demand AV services were

identified, out of which 2733 were established in an EU MS and 447 were focused on

films.62

Figure 2 gives an overview of their presence in the different MS.63

Figure 2: Film on-demand services in the EU (+ Norway and Switzerland) by country of establishment (2013)

Source: European Audiovisual Observatory, 2013c

Moreover, in AV, subscription VOD (SVOD) services experienced the strongest growth

for digital video (2013) with an increase of 147.5% (compared to a 43% increase for

digital rental and 37% increase for digital purchase). Digital subscriptions accounted for

26% of digital video services in 201364

. For sports content, new offerings are emerging,

where broadcasters offer unbundled online TV services allowing consumers to access

sporting events "à la carte"65

, alongside all-encompassing broadcasters' offers to view

their programs on a "second screen".

As regards the consumer demand, the lack of cross-border portability is a missed

opportunity to offer better services. The Body of European Regulators for Electronic

Communications (BEREC) estimated that Europeans, who travel at least once a year,

spend abroad on average 11.6 days per year. For citizens of Cyprus and Luxembourg the

yearly average is 30 days, and for citizens of Finland, Ireland, Lithuania and the

Netherlands close to 20 days.66

Indeed, the growing use of connected mobile devices

(smartphones, tablets),67

in particular for watching video, indicates consumers' interest

for accessing content wherever and whenever they want.

The current consumer demand was confirmed in a recent Eurobarometer survey68

. 16%

of the respondents (representing 20% of internet users) indicated they pay a subscription

to access online content and 17% of people having a subscription indicated they have

62 Fragmentation of the Single Market for on-line video-on-demand services: point of view of content

providers, 2014. https://ec.europa.eu/digital-agenda/en/news/fragmentation-single-market-line-video-

demand-services-point-view-content-providers 63

It is important to note that multiple VOD services are often exploited by the same service provider. 64 IVF Report: http://www.ivf-video.org/new/public/media/EU_Overview_2014.pdf 65 IHS Technology, Television Media Intelligence Service, Insight Report - Sports Rights: Operators

Evolve the Pay TV Proposition as Costs Go Up, August 2015, p. 13. 66 For more data on tourism see Annex 5. 67 See figures in the introduction. 68

http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/FLA

SH/surveyKy/2059

12

already tried to use it abroad, while 21% responded they would be interested to do so in

the future. In addition, 33% of those who do not have a subscription consider cross-

border portability as an important element if they were to take one. Having

combined these findings with the results from a previous Eurobarometer survey carried

out on tourism69

, it is possible to estimate the percentage of European consumers who

would potentially use this feature of online subscription services. They would represent

over 29 million people70

(5.7% of European consumers) at EU28 level71

, with significant

differences by countries (from 1% in PT and GR to 20% in SE and 22% in DK), as

indicated in the graph below. This number does not include European consumers who

may want to benefit from portability of content acquired on a transactional basis nor of

free-of-charge subscription services.72

Figure 3 – The current potential demand for portability of paid subscription-based services, by country

Source: own calculations on the basis of Flash Eurobarometer 411 and Eurobarometer 392

The fast evolution of the market for online content services as well as the rapid increase

in the number of consumers travelling within the EU show that the level of demand can

increase significantly in a short while. This is explained in the baseline scenario.

Drivers

The variations in the availability of cross-border portability of online content services in

the EU are caused mainly by different business practices in the different sectors. The

69 Eurobarometer 392 "Preferences of Europeans towards tourism" (fieldwork in January 2014) 70 On EU 28 level, 29.174 million people. Population figures from the Penn World Tables dataset (2011). 71 Own calculation based on Eurobarometer on cross-border access to content and Eurobarometer 392.

On the EU28 level, 15.96% of all survey participants have a subscription. 86% of people planned to

travel in 2014, 42% of whom to another MS. 72 Globally, 42% of consumers think it is very important to watch their TV & video content wherever

they are. http://www.ericsson.com/res/docs/2015/consumerlab/ericsson-consumerlab-tv-media-2015-

presentation.pdf

13

problem described above, in particular, results from the deep-seated licensing practices

of right holders and/or from the commercial practices of service providers in some

sectors of the content industries.

These practices are facilitated by the fact that copyright is territorial which means, in

essence, that those rights under copyright which are harmonised at EU level are

implemented in national laws and that the geographical scope of these laws only extends

to the territory of the MS in question. In consequence, a service provider that is making

content available online in more than one MS, including if it does so only for the purpose

of cross-border portability, must have the rights to use such content for the relevant

territories. Of course, the fact that copyright is territorial would not in itself prevent

right holders from granting multi-territorial licences (where otherwise they are in a

position to do so)73

. When they do so, the service providers would be able to offer

portability (in those MS covered by the multi-territorial licence). Moreover, in principle,

the territoriality of copyright also does not prevent right holders from granting licences to

service providers which, taking into account the limited extent of use of the content in

territories other than the home MS of the consumer, allow the use of the content in other

MS but only for the purposes of cross-border portability.

The licensing of sports broadcasting rights by sports organisers follows the same logic as

the licensing of copyright. The economic incentives often drive sports organisers to

exploit their sports broadcasting rights on a territorial basis.74

Hence,

broadcasters/service providers wanting to offer cross-border portability would need

licences for the affected territories.

The licensing practices of right holders:

I. In the audiovisual sector, the general practice is territorial licensing and territorial

exclusivity for premium content (e.g. films and TV series of particular interest for the

audience) that is characterised by high upfront investment. AV producers of premium

content typically grant an exclusive licence to a single distributor/service provider in

each MS. This form of licensing, in combination with release windows75

, allows

applying different prices in different territories and for different types of media and

ensuring that consumers wishing to watch a particular piece of content have access to it

only through one provider at a given time. Rights are also often pre-sold at the pre-

production stage to ensure the financing of the content. In exchange for a fixed upfront

payment to the film producers, distributors obtain exclusive exploitation rights in a

specific territory for a defined period of time.

As a result, service providers willing to acquire a licence for another territory to be

able to offer portability would not be able to do so despite the limited effect of

portability on issues such as the exclusivity of the exploitation in a given territory

(including on the release windows) because another provider would have the exclusive

rights for the territory. Alternatively, the provider wanting to offer portability would have

to bid for the licence against a provider who would want the rights to provide its service

73 e.g. where the rights are not held or administered by another entity in other MS 74 See further in Annex 4. However, this is not always the case, as in practice sports broadcasting rights

may also be sold on multi-territorial basis, E.g., the broadcasting rights for the Olympic Games in

2018-2024 were sold to Eurosport/Discovery for the entire Europe, see

http://www.olympic.org/news/ioc-awards-all-tv-and-multiplatform-broadcast-rights-in-europe-to-

discovery-and-eurosport-for-2018-2024-olympic-games/246462. 75 Release windows allow rights owners to apply different prices to different means of distribution of the

product. Different release dates are defined for cinema exhibition, DVD (rental/sales), VoD (with a

distinction between VOD and SVOD) or Pay-Per-View, Pay TV and Free TV. Release windows are

generally negotiated by the distributors according to commercial considerations; only in certain MS

they are regulated by law.

14

in the territory (not only to provide portability). The acquisition of such a licence would

require disproportionately high investment.

Cross-border portability is considered as an attractive feature of online content

services not only by consumers76

but also by the AV industry. In 2013 their joint

statement at the Licences for Europe forum confirmed their willingness to work towards

cross-border portability.77

However, in order to be able to allow AV service providers to

provide this feature to their consumers as regards every film or other piece of content in

their service, right holders would need to A) take into account cross-border portability

when negotiating new licences, B) review and amend the existing complex network of

contracts that currently ensures territorial exclusivity to distributors/service providers

(and consequently excludes cross-border portability) in 28 MS.78

The industry has not

embarked on this exercise yet and if it does so, achieving a situation where cross-border

portability becomes a standard feature of all online content services may take a

substantial amount of time79

and lead to diversified practices in the industry.80

However,

until cross-border portability becomes a standard element of all new and existing

licences, consumers may only be able to watch certain parts of the online content when

travelling abroad with black-outs for the "non-portable" parts.81

This is unlikely to satisfy

the consumer demand.

II. In the sports sector, the prevailing commercial practice of sports organisers is to sell

sports broadcasting rights for premium content on an exclusive territorial basis.82

Such

exclusivity enables right holders to collect higher revenues due to the uniqueness of the

content, and also allows them to adapt the price of rights to the level of interest in

different territories. As for the purchasers, i.e. normally broadcasting organisations as

well as other service providers, the exclusivity gives them a competitive advantage as

they can differentiate their offers from their rivals and a possibility to attract large

audiences. This in turn helps them to maximise their revenues from advertising and/or

subscription fees. As in the AV sector, the cumulative effect of exclusive territorial

licences acts as an obstacle to cross-border portability. On the contrary, non-premium

content sports organisers often do not require territorial exclusivity.83

In such cases,

service providers may be entitled to stream the content without territorial restrictions (or

sports organisers may launch such services themselves).84

76 See above and the results of Flash Eurobarometer 411. 77 See the joint statement of the AV industry (pledge No. 1) at the Licences for Europe forum (Annex 2). 78 The duration of licences in the AV sector varies significantly – it seems that such licences are

concluded for 3-10 years with the average duration of 4-7 years. 79 This is also supported by the fact that the pledge of the AV industry at the Licences for Europe forum

delivered no results in two years, in a market that is otherwise very dynamic. The lack of progress was

also confirmed by the Commission's monitoring of the terms of service offered by the service

providers to consumers (see Annex 7) and the discussions with stakeholders (see Annex 2). 80 E.g. as regards the length of the stay in another MS or other conditions of using this feature 81 It is to note that "partial portability" as explained earlier cannot be considered as a step towards "full"

cross-border portability in the AV sector as "partial portability" only covers content for which the

service providers has exploitation rights also in the visited MS, e.g. because the content is the

broadcaster's own production, or the provider also provides service in the visited MS and therefore

already has a licence also for that territory. This business practice will not lead to the cross-border

portability of the vast majority of AV content. 82 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014, p71 et seq. 83 Furthermore, if they cannot sell their media rights across borders or in certain territories, they may

want to offer their content across borders for free in order to increase their audience and attract more

sponsorship. 84 Examples include free streaming of various sports at the Sports Hub Channel, developed by

SportAccord in collaboration with YouTube; free online streaming of the second division of the

Spanish football league in 2014; matches of the Swedish football league are available across borders;

15

III. In the music sector, the licensing of rights in musical works is often organised on a

territorial basis85

although a number of music publishers and collective management

organisations (CMOs) grant multi-territorial licences. The multi-territorial licensing of

rights in musical works for online uses will be facilitated by the Directive 2014/26/EU on

Collective Rights Management which has to be implemented by MS by April 2016. In

June 2015, the CMOs PRS (UK), GEMA (Germany) and STIM (Sweden) received the

clearance of their deal by the Commission with a view to establishing a multi-territorial

licensing hub in Europe.86

Multi-territorial licensing is widely used for the rights held by

record producers87

.

Where multi-territorial licences are granted, service providers can provide their services,

including portability, across multiple territories. On the contrary, where licences are

granted for a single territory, the service provider would not be able to offer the cross-

border portability of its service without having obtained licences for all affected

territories (or without the possibility in the licence to engage in a certain "overspill" when

providing the portability of the service). At present, online music service providers, also

those that operate in a single MS and presumably license rights only for this MS only,

seem to offer their services with a cross-border portability feature.88

The reason behind

could be that the vast majority of music content is not licensed on an exclusive basis

(e.g. most musical works are available from multiple service providers in the same MS),

therefore the licensing practice of right holders does not create obstacles, beyond some

legal uncertainty (in cases where a licence is granted only for one MS and the service

provider offers portability in other MS), to the cross-border portability of services.

IV. In the book sector, one publisher typically acquires from the right holders exclusive

rights on, at least, a pan-European basis, often together with the translation rights that

will enable the book to be translated (by that publisher or another one after rights are

assigned to him) to other languages.89

As a result, publishers are in most cases able to

license a retailer to sell the e-book in multiple territories and, in practice, usually do so.

This also allows the retailer to provide cross-border portability of the service. For

books in English language, there is generally a split of the rights that are granted by

authors: publishers in the UK and Ireland generally hold the exclusive rights for these

markets as well as the Commonwealth countries. The US publishers usually hold

exclusive rights for the US, Mexico and South America. For all other territories,

publishers generally hold non-exclusive rights.90

the Basketball World Championship organised in Lithuania in 2014 was available on a specific

streaming website; European Tour TV, Ryder Cup’s platform, streams for free golf matches. However,

live streaming is available only in MS which do not benefit from local broadcasting, i.e. where there is

no broadcaster/service provider who bought the rights to broadcast live events; see

http://www.europeantour.com/europeantour/season=2013/tournamentid=2013038/news/newsid=1933

30.html#7eG3vMYYaEkdTFbl.97 Also see ASSER/IVIR Study on sports organisers’ rights in the

European Union, Final Report, February 2014, pages 68-69. 85 Right holders usually transfer their rights for all EU territories to a single CMO or a publisher, who in

turn enter into agreements with other collective management organisations and sub-publishers for

representation in separate EU MS. 86 EC press release: http://europa.eu/rapid/press-release_IP-15-5204_en.htm 87 Independent record producers often license local distributors to manage their rights in particular EU

territories but they also resort to "aggregators" to provide multi-territorial licences for online services. 88 The European grouping of author CMOs, GESAC, states that the agreements that their members have

with online music service providers do not prevent portability of such services. 89 E.g. in the UK and Spain, the agent is generally the one holding the translation rights on behalf of the

author; s/he then assigns the rights to a publisher for a given language. 90 This means that consumers in the EU, with the exception of those in the UK and Ireland, may choose

between two versions of an English book (one published by a US and the other by a UK publisher).

16

V. In the video games sector, online game developers were traditionally the holders of

rights and would grant licences to game publishers without territorial limitations.

However, as the sector evolves and new forms of distribution emerge, copyright

ownership and licensing is changing too. On the one hand, game developers often

distribute games themselves - directly over the Internet or through application stores

(which act as agents for the game developers). On the other hand, game publishers tend

to produce games themselves and rely less on independent game developers. In any case,

a game developer or publisher has the ability to make a game available without territorial

restrictions and typically publishes a game simultaneously in multiple territories91

. This

general absence of territorial restrictions and the fact that downloading is still a

prevalent mode to access games explain why a consumer is usually able to continue

using an online gaming service or a particular video game while staying temporarily

abroad.

The commercial practices of service providers:

The lack of portability of content across borders can also be the result of business

decisions taken by service providers. As a result, there are instances where even if no

obstacles to portability are created by right holders e.g. multi-territorial licences are

granted and licences are granted without territorial exclusivity, portability is not offered.

Service providers, especially in the AV sector and for premium sports content, may

not be interested or financially capable of acquiring multi-territorial licences which

require a substantial budget.92

Further, according to the feedback received from

stakeholders,93

considerations such as regulatory requirements,94

technological

constraints,95

the existing demand for the particular services, the position of competitors

as well as the availability of advertising may result in service providers deciding not to

enter certain markets at all and hence not to offer portability of their services in these

markets.

In the other sectors (music, e-books, video games) either online service providers are

able to acquire multi-territorial licences and offer the portability of their services in the

different territories covered by the licence or licensing is not carried out on a strict

territory-by-territory basis (e.g. licences allow small-scale use of the service beyond the

licensed territory) enabling service providers to offer cross-border portability.

Consequently, service providers do not seem to apply restrictions to the cross-border

portability of their online content services.

Consequences

In consequence of the above-described licensing practices and business considerations, a

substantial number of online content services, especially in the AV sector, as well as

premium sports content, remain locked in national territories (and are thus not portable).

This situation generates frustration for a high number of consumers who, while

91 Information from the Interactive Software Federation of Europe (ISFE); as regards evolution of IP

management in general, see article published in the WIPO Magazine, available at

http://www.wipo.int/wipo_magazine/en/2014/02/article_0002.html 92 See Annex 2 for the AV sector. For instance, when sports organisers offer their broadcasting rights on

territorial basis, broadcasters/service providers need to bid separately for each market and for the

entirety of the rights, not only for rights linked to cross-border portability. Therefore, a

broadcaster/service provider who is interested only in a cross-border portability function, in addition to

broadcasting in a national territory, would not have a possibility to acquire such a right. E.g., in

December 2014 Premier League issued invitations to tender for its UK AV broadcasting rights for the

seasons 2016/17-2018/19, and separately sold its international broadcasting rights. 93 See Annex 2. 94 e.g. consumer protection rules 95 e.g. broadband infrastructure

17

travelling in other parts of the EU internal market, cannot use their subscription services

or enjoy the online services or content they have previously purchased or rented.

Furthermore, either because of the licensing practices or due to the high costs of

obtaining multi-territorial licences, online service providers miss out on the opportunity

to innovate, better respond to consumers’ needs and provide them with an attractive

additional feature of the service.

In the AV sector, right holders may also lose out by not being able to allow service

providers in their licences to provide for a value-added service to consumers as this

would require the renegotiation of their existing network of exclusive licences96

in

different territories. This is a missed opportunity as offering the cross-border portability

of services would not affect the current functioning of the AV sector (as described above)

as only consumers that have subscribed to the service in their home country or

rented/purchased content there and are temporarily in another MS would benefit from it.

The same logic applies in the premium sports sector.97

Based on the evolution of the market, as explained below, the consumer demand that is

unmet by the online service providers can be expected to increase rapidly in the coming

years.

How would the problem evolve, without EU action?

Consumer demand for the cross-border portability of online content services is expected

to increase with the growing use of mobile devices. To illustrate this trend, it is expected

that by the end of 2020, the number of smartphones in Europe will have doubled,

reaching 800 million, meaning that more than 70 percent of mobile subscriptions will be

for smartphones. Smartphone viewers in Europe consume more than four hours of video

content on a weekly basis, almost half of which they view on-the-go98

. Moreover, more

than 59 million European households (20% of the European pay-TV market) are

expected to pay for subscription streaming video services by 202099

.

Overall, also taking into account the projections for the increase in tourism, it can be

expected that the percentage of European consumers at EU28 level who would

potentially use the cross-border portability feature of online subscription services

could reach 14% by 2020. This would equal around 72 million people in Europe.100

In

96 See explanation above. 97 As in the AV sector, the duration of licences for broadcasting rights for sporting events varies, e.g., in

the UK the rights for the rugby matches in the Six Nations tournament were sold for six years starting

from 2016, see http://www.rugbyworld.com/tournaments/six-nations-2012/tv-rights-will-six-nations-

deal-set-a-trend-46689, for club championships, broadcasting rights may be licensed for a shorter

period, e.g. Sky Deutschland acquired the exclusive pay-TV rights for all live Bundesliga and 2nd

Bundesliga matches.from the 2013/14 to 2016/17 season in Germany, i.e. three seasons, see

http://www.broadbandtvnews.com/2012/04/18/sky-deutschland-wins-live-bundesliga-rights/. 98 Ericsson mobility report; http://www.ericsson.com/thecompany/press/releases/2014/11/1872291 99 Data from Digital TV Research; see: http://www.homemediamagazine.com/streaming/report-20-

european-tv-homes-have-svod-2020-34036 100 Own calculation based on Eurobarometer on cross-border access to content and Eurobarometer 392.

This is calculated by multiplying the percentage of the European citizens who travel or temporarily

stay in other EU MS by the estimated percentage of European citizens having a subscription for AV

content, estimated growth in tourism, and estimated growth in the number of subscriptions. 14% of EU

consumers equal approx. 72 million. Sources: for the estimated population in EU28 for 2020

(Eurostat); forecast for the growth in the number of subscriptions for AV content (IHS data); forecasts

for tourism trends in EU 28: https://ec.europa.eu/growth/tools-

databases/vto/documents?name_list=All&field_type_tid=9040&field_year_value=All&items_per_pag

e=10

Assumptions: 1) Forecast for the number of subscriptions is for AV only but assuming that the trend

will be the same across all media types. While the number of paid subscriptions in music is still lower

than in AV, the growth is similar. See e.g.

18

the public consultation, the vast majority of consumers who responded argued in favour

of cross-border access to (including the cross-border portability of) online content

services.

As regards other measures related to the DSM, the end of mobile roaming charges as of

June 2017 will have a beneficial economic effect on cross-border portability in sectors

where it already exists and vice versa. On the one hand, the roaming measure will

encourage consumers to use the online content services without the fear of incurring

prohibitive telecoms charges and thereby increasing consumer demand for portable

services. On the other hand, the cross-border portability of content will mean more traffic

flowing through the networks,101

justifying further investments by telecom operators. The

measure on roaming will however not be able to ensure cross-border portability of

content in areas where it does not exist yet. Also, as explained earlier in the IA, cross-

border portability is a self-standing problem that would not be resolved by any other

initiative foreseen in the DSM Strategy.

In particular, for those consumers who wish to access the services they subscribed to or

the content they bought or rented in their home country, the barriers deriving from the

licensing and distribution of content on a territorial and exclusive basis are likely to

persist in the AV sector and for premium sports content due to the reasons described

above. Exclusive territorial licence agreements would continue to restrict the cross-

border portability of content, except where service providers have licences for all EU or

for multiple territories (or where contracts allow for certain overspill, i.e. small-scale use

of the service beyond the licensed territory).

Changes in this area could be very slow to materialise, as shown by the lack of tangible

progress after the pledge that the representatives of the AV sector made in 2013 at the

"Licenses for Europe" stakeholder dialogue to facilitate cross-border portability.102

Two

years after the "portability" pledge was undertaken, there do not seem to be any tangible

results or concrete industry follow-up. While the cross-border portability of all online

AV content services in the EU is not expected to materialize in the medium term for the

reasons explained earlier, it cannot be excluded that some or all of the AV industry

would still try and follow up on the pledge made at the "Licences for Europe" forum. In

this case, right holders would have to negotiate and grant new licences all over Europe

taking into account the limited cross-border use required by portability. These licences

would however only allow for the cross-border portability of the "new" content covered

by them. Therefore, right holders would also have to embark on renegotiating the

existing licences with territorial exclusivity in all EU MS in order to allow the cross-

border portability feature to function across the EU. It is also possible that a limited

number of major providers try and gradually initiate such re-negotiation process to be

able to propose portability services to their subscribers. For other (smaller) providers

however re-negotiating contracts would likely represent a very burdensome exercise.

Even if some progress is achieved by the market participants themselves, the situation

would lead to consumers being put on an unequal footing in the internal market due to

the disparities that will result from individual renegotiations of contracts. Moreover, even

if right holders granted service providers the right to provide cross-border portability, the

http://www.musicbusinessworldwide.com/files/2015/04/Netflixvsbiz2.jpg

2) Forecast for the number of subscriptions is for 14 EU MS (AT, BE, DE, DK, ES, FI, FR, IE, IT,

LU, NL, PT, SE, UK) but assuming that it would be the same for EU28. While data is only available

for the 14 higher income MS, they represent over 77% of the European population. 3) Projections of

the growth in tourism are available for years 2010-2020 and for subscriptions for 2014-2019. 101 A "fair use" safeguard will mitigate excessive uses. 102 See Annex 2 for details on the "Licences for Europe" forum and the pledge of the representatives of

the AV sector.

19

contractual arrangements surrounding it would be diverse and service providers may also

eventually opt for not providing this feature to their consumers, e.g. due to the required

safeguards or the obligation to black out parts of their service. Therefore, even if the

AV industry follows up on the "Licences for Europe" pledge, also taking into account the

relatively long duration of licences in the AV sector, the growing consumer demand can

be expected to remain unmet or only partially met in medium term.

In the sports sector, it may be easier to negotiate licences covering cross-border

portability when sport broadcasting rights are licensed for a short duration. However, this

may not ensure a uniform practice. Moreover, broadcasters/service providers who

purchase rights for live events may be less willing to ensure portability, if they cannot

offer the same for other premium content, including AV content. Otherwise, they would

have to offer their services with "black outs" for consumers which could be unacceptable

for reputational reasons.

In the music sector, the cross-border portability of subscription and transactional

services, which is already commonly proposed by platforms (both by larger players and

smaller providers) would probably continue to be the norm. The existing business

practice in the sector is unlikely to change in the short term and it would not be possible

for new players to enter the market without such offer. In the longer term, the licensing

practices in the market could develop in different directions. While the introduction of

further territorial restrictions seems unlikely, it cannot be excluded. Both in short and in

longer term, in those cases where the terms of the use of the service diverge from the

actual practice, unless those online service providers review the terms and/or their

licences with the right holders, legal uncertainty would remain.

Book publishers and video game developers and publishers are likely to continue to

generally grant multi-territorial licences enabling online services to offer cross-border

portability; although due to the rapid evolution of these markets, longer-term

developments are hard to forecast.

To conclude, under the baseline scenario, in the AV sector and for premium sports

content, there would be an increasing demand for portability of online services from an

increasing number of consumers who travel abroad for work, studies or holiday and are

unable to access online services they have subscribed to or online content they have

purchased/rented in their home country. In the other sectors, cross-border portability is

generally unrestricted (at least in practice) and at present it can be expected to remain so.

This development in both technology and resulting consumer habits calls for the

adaptation of the legal framework in the general interest.

3. WHY SHOULD THE EU ACT?

Legal basis

Article 114 of the Treaty on the Functioning of the European Union (TFEU) confers on

the EU the power to adopt measures, including a regulation, which have as their object

the establishment and functioning of the internal market. Removing the existing barriers

to the portability of online content services during temporary presence outside of the

home MS would, depending on the sector, be a first step to make possible or facilitate

and encourage the free movement of those services in the internal market, and adapt the

legal framework to the change in circumstances brought about by the very rapid growth

of the use of portable devices across borders.

Online content services which would be affected by EU action predominantly rely on

copyright-protected content. The EU has harmonised the area of copyright as regards the

rights which are relevant for online dissemination of content (notably the reproduction,

communication to the public and making available rights) – see Annex 6. As explained in

20

more detail in Section 2, these rights are territorial and in consequence a service provider

that is making online content available in more than one MS must have the rights to use

such content for the relevant territories. The rapid technological development as regards

access to the internet and the increasing use of mobile devices whilst temporarily in other

MS require reexamining the above framework as to whether it can continue contributing

to the development of the single market.

The present initiative would concern the exercise of these harmonised rights across

borders. Without the adaptation of the way the rights are exercised it would be extremely

difficult to respond to developments in technology and commercial practices of service

providers that allow consumers to access their online content services on the go via

portable devices. As this adaptation would affect the harmonised framework concerning

the scope of copyright and related rights, it would have to rely on Article 114 TFEU as a

legal base.

As explained in Section 2, certain elements of online content services, e.g. sporting

events, are not protected by copyright and therefore not subject to the copyright

harmonised legal framework. However, certain aspects of TV transmissions of sporting

events have been harmonised by Directive 2010/13/EU (see Annex 4). Also, sporting

events are included in broadcasts in which broadcasting organisations can invoke rights

harmonised at EU level. Other rightholders, as the case may be, can also invoke rights

harmonised at EU level to works and other subject matter contained in those broadcasts.

Furthermore, as indicated by the CJEU103

, sporting events, when broadcast, are often

accompanied by copyright-protected elements such as the opening video sequence or the

anthem. The present initiative has as its objective facilitating access, inter alia, to

transmissions of broadcasting organisations which include transmissions of sporting

events where such transmissions are offered to consumers as an online content service. In

order to fully deliver to consumers the benefits of access to online content services when

they travel in the EU, taking into account the rapidly changing development of

technology and resulting consumer habits, it is important to include all elements of such

transmissions in the initiative. Otherwise the result with regard to online transmissions,

would be such that consumers would obtain access to those parts of the service which are

protected by copyright while the other parts would be 'blacked-out' by service providers.

This would be inconsistent with the objective of ensuring uninterrupted access to the

entirety of the online content service to consumers who travel in the EU.

Subsidiarity

The subsidiarity principle (Article 5(3) TEU) requires the assessment of the necessity and

the added value of the EU action.

Necessity: The portability of online content services is per definition a question of a

cross-border nature. It ensures that consumers who have subscribed to an online service

in their home country or who have purchased or rented content there, could access this

service or content when they travel to another MS. In addition to certain business

considerations, a key reason why this is not possible today in some sectors (AV and

sports content) is the complex system of contracts between the right holders and the

distributors/service providers in the 28 MS which ensure territorial exclusivity. They

would need to be reviewed one by one and in a consistent manner in all territories in

order to carve out cross-border portability. While this possibility cannot be excluded, it

would entail significant costs for the parties and it would lead to diverse solutions in the

103 See Joined Cases C403/08 and C429/08, Football Association Premier League Ltd, v QC Leisure, (C-

403/08); Karen Murphy v Media Protection Services Ltd (C-429/08), para 149.

21

market (as it was explained in Section 2).104

Also, until cross-border portability becomes

a standard element of all licence agreements, which can be expected to take a long time

considering the need for a one-by-one revision of the contracts in AV and sports in 28

MS, some of the content in the catalogue of the service provider would be portable and

some would not. This would require providers to black out some of the content during

the consumers' temporary stay abroad. Therefore the fragmentation in the market would

persist or even increase in the short to medium term. As copyright and rights related to

copyright such as rights of broadcasting organisations in transmissions have been

harmonised at EU level, MS cannot intervene via legislation in order to ensure cross-

border portability. Therefore, such action can only be taken at EU level. Consequently, if

the rights in question require adaptation in order to ensure cross-border portability, only

the EU is entitled to act to adapt the legal framework.

Intervention only in copyright would facilitate the negotiations between right holders and

service providers however it would not be sufficient to ensure that cross-border

portability becomes available to consumers. This may only be achieved if the obligation

to provide for this feature cannot be overridden by contracts. This must include existing

contractual arrangements so as to ensure that portability becomes available for

consumers at the same time across the EU. Action by MS would not be sufficient to

achieve EU-wide results and the availability of content would remain patchy with

limitations not only as regards certain pieces of content but also to certain MS.

As far as the other sectors (music, e-books, video games) are concerned, currently there

is no evidence of problems with cross-border portability. However, in the music sector,

in some instances despite service being portable in practice, end-user agreements state

that customers are allowed to access the service solely in a territory of the MS in which

they subscribed to the service. This is due to the licensing practices for online uses which

are, unlike in the AV sector and for premium sports content, generally not based on

territorial exclusivity. Consequently, in principle, it would seem that these sectors could

be excluded from the intervention. However, in order to provide for full legal certainty

and for the initiative to be future-proof by avoiding possible future fragmentation105

, it is

indispensable to cover all sectors of the content industry in an equal manner. If these

areas would not be covered by this intervention, MS would not be able to address

problems arising in relation to copyright-protected content for the reasons explained

above. Legislative action at the EU level to adapt the copyright acquis would ensure

greater legal certainty and would do away with the need to seek separate licences for the

purposes of cross-border portability. It would provide service providers a guarantee that

they will be able to provide portability to their consumers also in the long run and to

consumers to be able to benefit from this feature.

Added value: In the short to medium term, only EU intervention can ensure that the

conditions for consumers’ access to online content services do not vary according to the

MS they are located in at a specific moment. Including cross-border portability in all

contracts by market participants may be attainable in the long term but it would be costly

and will result in diverse solutions applied by different right holder and providers. On the

contrary, in the case of EU intervention the consumer would have access to the service he

104 Two years after the pledge made by the AV industry at the "Licences for Europe" forum, there is no

evidence that "full" cross-border portability has been made available by any European service provider

in the sector. Partial portability, as provided today and as explained in Section 2, cannot be expected to

lead to solution across the board. 105 Some of these sectors could start using exclusivity to differentiate offers. If only some right holders

changed their licensing practice and applied some form of territorial exclusivity, service providers

would not be able to provide for the cross-border portability of their service anymore.

22

has subscribed to or to the content he has purchased/rented under the same conditions, no

matter in which of the other 27 MS he travels to. EU action providing for further

harmonised conditions would also produce clear benefits to online service providers,

compared to any national solutions, by creating a legally certain framework for the

provision of cross-border portability of online content services across Europe.

4. WHAT SHOULD BE ACHIEVED?

The goal of the EU policy intervention is to solve the problem identified in Section 2.

The absence of cross-border portability in the EU is a specific problem that requires a

specific solution. It is necessary to remove certain barriers in the functioning of the DSM

to ensure that consumers can access online content services they have subscribed to or

online content they have purchased or rented when being temporarily present in another

MS. Other measures under the DSM Strategy will address other matters and would not

solve this particular problem. They would not make this initiative obsolete but would

complement it.

Currently certain licensing practices by right holders and certain terms of use by service

providers prevent consumers, when travelling abroad, from accessing the service they

have subscribed to or the content they have bought or rented in their home country. This

problem is particularly present with respect to AV and premium sports content. The

initiative should aim at removing these barriers so that the needs of users can be met

more effectively. In the other sectors (music, e-books and video games), the current

contractual practices do not seem to limit cross-border portability (despite legal

uncertainty in some services' terms of use – see Section 3). It cannot however be

excluded that licensing practices change in the future or service providers decide to

restrict the access of consumers to some of their currently available services.

Furthermore, services may combine different types of content (e.g. AV, music, sports)

with different degrees of portability. Therefore, in order for the EU intervention be

future-proof and effective, it is necessary to cover all types of content and not to

differentiate between online content services according to the content they use.

At the level of the DSM, the general objectives aim at removing barriers that currently

prevent consumers from using the services they have previously subscribed to or from

accessing content they have previously purchased or rented, when travelling in other EU

MS. From the perspective of right holders and service providers, the objective is to better

respond to the needs of consumers. The specific objective of the EU action is to ensure

the cross-border portability of online content services; it is one of the measures necessary

to complete the DSM.

Figure 4: Objective tree

23

5. WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES?

As regards copyright-protected content, the objectives presented above could be achieved

by the introduction of the rule localising all copyright-relevant acts occurring online

combined with a further harmonisation of copyright law or by a full harmonisation of EU

copyright law and a single European copyright title. Such options, while not excluded as

a longer term project, are beyond what is needed to solve the specific problem identified

in this IA as they would address not only the question of cross-border portability of

online content services but also a much broader question of the exploitation of works and

other protected subject-matter over the internet as well as other issues such as authorship

and ownership of works. Due to the very wide scope of such options, the timeframe for

their negotiation and implementation would necessarily be very long. Consequently, they

are not part of the short or medium-term actions envisaged in the DSM Strategy which

aim at providing targeted solutions to specific problems. Also, the problem of cross-

border portability of online content services would not require such far-reaching

measures and can be resolved under a much shorter timeframe. The above options are

therefore discarded as disproportionate for the current objectives.

Baseline

No policy intervention. This option would consist in relying on market players to

progressively offer portability of content online as well as on the courts, and notably the

CJEU, to clarify the application of provisions of EU secondary law and of the Treaty

relevant to the free movement of services. It would also mean continuing to rely on the

application of competition law to address territorial restrictions as this may have an effect

on the provision of portable online content services.

Option 1 – Guidance to stakeholders on the cross-border portability of online

content services

This option consists in guidance to stakeholders by the Commission encouraging online

content service providers to provide for cross-border portability of their services across

the EU. In addition to service providers, this guidance would also be addressed to right

holders, who would be encouraged, when licensing rights to online content service

providers, to grant the rights allowing for portable uses i.e. temporary uses of the online

content in a MS other than the MS where the consumer concluded the subscription (or

the transaction in the case of download to own or rental services). The extent of the

portable uses would have to be defined in contracts and so would be the necessary

safeguards (e.g. as regards the authentication of customers). The guidance would also

address MS which would be invited to actively monitor market developments and the

conditions under which the portability of services is provided.

Stakeholders' views

This option is not favoured by consumers as their objective is to have a solution that

delivers portability in a fast and efficient manner. It used to be favoured by right holders

and service providers although over time, the views of at least a part of content industry

evolved and support was expressed with regard to the legislative solution (see below).

Option 2 – Legal mechanism to facilitate the cross-border portability of online

content services in the EU

Main elements

24

This option would entail a legal mechanism according to which the provision of the

online content service106

to a consumer who:

has lawful access to an online content service in his MS of residence, and

is temporarily present in a MS other than his MS of residence,

would be deemed to occur in the MS of consumer's residence (as opposed to in the MS of

temporary stay of the consumer). The service provider could therefore, if not limited by

contract, provide cross-border portability of his service across the EU without the need to

acquire rights for the relevant EU MS; the right to provide an online content service in

one MS would be sufficient.

There would be no prohibition on contractual clauses which limit or prevent the

application of the legal mechanism.

Definitions and other provisions

Services to be affected by the intervention:

an audiovisual media service within the meaning of Directive 2010/13/EU of the

European Parliament and of the Council107

as well as a service the main feature of

which is the provision of access to content protected by copyright and/or related

rights such as films, music, books, games, etc. or to transmissions of broadcasting

organisations108

,

portable (accessible from all locations that allow online access) in the MS of

residence of the consumer 109

,

provided to the consumer against payment of money or without such payment

(e.g. advertisement-based services), in the latter case only if the MS of residence

of the consumer is verified by a provider.

'MS of residence' would be defined as the MS in which the consumer habitually resides.

This is normally established by the use of proxies such as banking details, the existence

of an agreement for broadband or telephone connection, IP address, etc.

'Temporary presence' would be defined, for a subscriber, as a presence in a MS other

than his or her MS of residence. No concrete indication as to the length of such

temporary presence would be provided in the intervention. Several factors explain the

choice of this approach.

Specification of duration of temporary presence is not required, as the main defining

feature is that such presence does not change the habitual residence of the subscriber.

The definition needs to accommodate temporary presences of various length and for

106 Therefore e.g. services of satellite or ‘classical’ cable TV would not be included (but internet-based

cable services like “Magine” would). 107 Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the

coordination of certain provisions laid down by law, regulation or administrative action in Member

States concerning the provision of audiovisual media services OJ L 95, 15.4.2010, p. 1–24.

108 Including online services linked to subscription-based TV or radio services. 109 It is necessary to distinguish the two types of services as in practice, for AV content, in-home and out-

of-home rights are sold separately and therefore certain service providers using IP platforms (such as

cable or IPTV) are granted only in-home rights. If the proposed rules applied to such providers, they

would be required to enable cross-border portability of their services despite not being able to provide

portability in their national territory. Furthermore, even if not restricted by licensing conditions,

service providers may make a commercial decision not to offer their services on a portable basis in the

national territory e.g. because of the investment necessary for the launch of such services.

25

various purposes, such as leisure, travel, work and study. This will benefit consumers

without generating extra cost for service providers or undermining right holders' content

distribution practices. Also, online content services are developing dynamically and are

characterised by a variety of offers, which makes it difficult to set a uniform duration.

Furthermore, the objective of the intervention is to keep the possible verification of the

MS of residence within what is reasonable and necessary. This objective would not be

served by a fixed period of temporary presence which would imply checks of the exact

duration of consumers' presence in MS other than his or her MS of residence.

The intervention would not require service providers to use any authentication tools but

would leave this matter to arrangements between holders of relevant rights and service

providers.

The legal mechanism would apply to the ongoing licensing contracts for online content

between right holders and service providers only if both parties would agree on its

application. It would apply to all new licensing contracts between right holders and

service providers.

Full application to SMEs is envisaged (see Section 6). '

Legal instrument

This option entails EU legislative intervention as only a binding instrument can guarantee

that sufficient uniformity of the application of the legal mechanism and legal certainty

are achieved for all stakeholders.

A regulation would be directly applicable and would not need to be implemented in

national law as it would have immediate effect and is a particularly suitable instrument

when the objective is the uniform application of rules in a certain area. This type of

instrument would be the best to achieve the objective of facilitating the portability of

online content across the EU. It would allow a uniform application of the portability rules

across MS and would guarantee that right holders and online service providers from

different MS are subject to the exact same rules. This would be particularly important for

online content services present in different territories.

On the contrary, a directive would leave too much room for MS to choose how to

implement the relevant rules in their national legislation. As a result, there would be a

high risk that the conditions for the access to the relevant subscription services would be

different for consumers when travelling to different MS. Furthermore, the conditions

may be different for service providers wishing to offer services across borders in the

internal market. It may also take longer time to deliver the expected results in the market.

Therefore, a directive would fail to achieve the pursued objectives.

Stakeholders' views

Right holders and service providers which had initially favoured Option 1 expressed

support for a legislative intervention. The content industry recognises that there is a

demand for portability and that offering portability, especially for AV and premium

sports content, is extremely difficult due to the existing network of agreements. Option 2

is the preferred option of the content industry as it would eliminate the licensing obstacle

to portability while leaving the contractual freedom for the parties. Service providers

would not be obliged to provide the cross-border portability of their services and right

holders could influence the conditions on which this portability is provided by their

contracts with service providers. AV producers would prefer to control the triggering of

the legal mechanism, i.e. condition the application of this mechanism on the agreement

between right holders and service providers. The option is not favoured by consumers as

it does not include the mandatory element of providing portability.

26

Option 3 – Intervention to ensure the cross-border portability of online content

services in the EU

Main elements

The intervention would contain the following three elements:

1) The legal mechanism described in Option 2.

2) An obligation on the providers of online content services who lawfully provide a

portable online content service in a MS of the EU to ensure cross-border portability of

services, i.e. to provide customers who are residents of this MS with access, during their

temporary stays in other MS, to the same content, on the same range and number of

devices and the same range of functionalities (including, for instance, accessibility

features for people with disabilities) as those offered in their MS of residence. Providers

would not be however obliged (unless they commit to it in an express manner) to provide

the same quality of the delivery of an online content service in other EU MS as in the MS

of residence of the customer.

3) Prohibition of restrictions in contracts between right holders and providers of online

content services or such service providers and their customers limiting cross-border

portability of online content services.

Definitions and other provisions

Definitions would be the same as in Option 2.

The intervention would not require service providers to use any authentication tools but

would leave this matter to arrangements between holders of relevant rights and service

providers. At the same time, there would be appropriate safeguards relating to the

proportionality and necessity of the requirements potentially imposed by right holders to

ensure that such requirements would be adequate for the objective of authentication and

would not result in an excessive burden on service providers.

There would be also general data protection safeguards to ensure that the potential use of

authentication tools is made in a proportionate manner.

The intervention would apply to the ongoing contracts for online content services

between right holders and service providers and between service providers and

consumers. Market players would benefit from a transitional period to make

arrangements necessary to adapt to the new rules.

Full application to SMEs is envisaged (see Section 6).

Legal instrument

This option entails EU legislative intervention as only a binding instrument can guarantee

that the portability is achieved in all MS and that sufficient uniformity and legal certainty

are achieved for all stakeholders.

The considerations as regards the choice of legal instrument are the same as in Option 2.

A regulation seems better suited to reach the objectives of the initiative.

Stakeholders' views

This option is favoured by consumers. As to the views of right holders and service

providers see Option 2.

6. WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE

AFFECTED?

Baseline

27

Effectiveness

The impacts of the baseline scenario will significantly vary depending on the sector, the

development of business models and on licensing practices, as described in the problem

definition.

Content industries: The pressure exerted by consumers who increasingly use mobile

devices to access content might result, in the medium to long term, in right holders and

service providers progressively finding solutions to allow cross-border portability of

online AV content. However, this is likely to require long negotiations, as it would

involve changes to multiple, often long-running licensing contracts, possibly also with

regard to licence fees (though it is not evident given the negligible impact of portability

on the territorial exploitation of content). Right holders are expected to be, at first, rather

reluctant to allow for portable uses within the EU, due to the difficulty deriving from

reviewing the existing network of licensing agreements and because of possible problems

in determining/monitoring that the use is really a "portability" use, i.e. that the use in MS

other than the home MS of the consumer is limited to temporary stays.

In sports, gradually, due to consumer preferences, sports organisers may offer cross-

border portability when selling their broadcasting rights. Where broadcasting rights for

premium sports content are licensed for a short duration, such evolution could take place

in a short to medium term. However, the duration of licences may vary significantly.

Furthermore, due to different market dynamics applicable to different sports, this

evolution can take some time and lead to diversified results. Sport right holders may, at

first, have the same concerns as described above for the determination and monitoring of

the portability use.

In the short or medium term, there is no significant change expected in the licensing

practices in music. Producers of music (majors and independent) are likely to continue to

license on a multi-territorial basis if online service providers request such licences. As

regards authors' rights, music publishers and CMOs (those that comply with the

requirements of the CRM Directive) are likely to do the same. These multi-territorial

licences would allow online service providers to continue offering portability. Even in

the case of territorial licences being granted to online service providers, right holders are

likely to accept a certain level of portability offered by service providers as these licences

would not be based on exclusivity. In the same way, in the short or medium term, no

change in the licensing practices for e-books and online games is expected. However, it is

difficult to make predictions in that regard for the long term given the rapidly-evolving

context in which these services operate.

Service providers: Online AV services, in particular subscription services (including

online content services offered by pay-TV operators), would be increasingly interested in

offering to their customers the possibility to access the service when travelling in other

EU MS. Certain operators have already announced their intention to explore with right

holders the possibility to offer this.110

However, concrete results could be achieved only

if right holders are willing to review existing licensing arrangements and accept to grant

authorisations for portable uses. This would partly depend on the market power of

service providers which in turn puts smaller providers and especially start-ups (SMEs) in

a difficult position. In any case, it is likely that service providers would only be able to

provide the cross-border portability of parts of the content offered by their service.

110 E.g. Canal+ for its SVOD service, see: http://electronlibre.info/le-groupe-canal-pret-a-adopter-la-

portabilite-pour-ses-abonnements/

28

Concerning sports, consumers who increasingly use mobile devices for viewing sports

content online111

may exert pressure on broadcasters/service providers to ensure

portability of their services. However, broadcasters/service providers, who acquire

exclusive rights for live sporting events, may be less willing to ensure cross-border

portability for consumers, if they cannot offer the same for other premium content,

including AV content. Indeed, it could be difficult to explain to consumers why part of

the content is portable, while the other is "blacked-out". Portability of sports content may

then depend on the portability of other AV content.112

Also, the territorial exclusivity

enjoyed by broadcasters/service providers leads to less competitive pressure to

differentiate their offerings (including by offering cross-border portability) as such

content is not available to consumers elsewhere.

As both major and smaller music platforms already offer cross-border portability of

subscription services, they are expected to continue to do the same under the baseline

scenario (assuming no changes in the licensing practices of right holders). Portability is

so common that it is highly unlikely that new players could enter the market without

providing this service to their customers. The same would apply to e-books and video

games.

This option would have no impact either on competition in the internal market or the

competitiveness of the creative industries. It would have no impact on employment

either. Other than those mentioned above, there are no specific impacts on SMEs.

Consumers: In the short term, consumers travelling abroad would remain cut-off from

their home countries as regards the access to AV content and premium sports content).

However, in the medium to long term, certain online services might be able to offer to

their customers the cross-border portability of their service. However, under this option,

this is not expected to become a standard industry practice. The number of consumers

being able to use portability across borders is likely to increase slowly and unevenly

across Europe. Specifically for premium AV and premium sports content, given that there

are prevailing exclusivity arrangements, consumers may not have an option to switch

services providers in favour of providers offering cross-border portability, as the content

may not be available elsewhere.

No significant impact is expected for consumers as regards other types of content (music,

e-books and games). Cross-border portability is likely to continue to be widely available

for EU consumers assuming no changes in the licensing practices of right holders.

However, as far as the music content is concerned, the legal uncertainty as regards terms

of use of the service113

would continue.

Efficiency

The baseline scenario would not entail any compliance costs and would not deliver any

benefits.

Coherence with other EU policies

Cultural diversity: The baseline scenario would not have any impact on cultural

diversity. It would not affect the production of new cultural content.

111 See Annex 5. 112 However, unbundled offerings are also emerging, where broadcasters offer sports content 'à la carte',

see Section 2. Portability of such unbundled services would be less dependent on the portability of

broadcaster's overall package. 113 See Section 2.

29

Fundamental rights: The baseline scenario would not have any impact on copyright as

property right or on the freedom to conduct a business, as recognised in the European

Charter of Fundamental Rights (Articles 16 and 17).

Third countries, trade and environment: The baseline scenario would not have any

impact on third countries and trade or on the environment. It also does not affect the EU's

and the MS's international obligations.

Option 1 – Guidance to stakeholders on the cross-border portability of online

content services

Effectiveness

The impact of this option would also vary across sectors, depending on the existing

licensing practices (use of multi-territorial licences, territorial exclusivity etc.).

Content industries: Right holders in the AV and sports sectors would be the most

impacted, as, in practice, this option would mainly address them and invite them to

review their licensing practices which currently limit cross-border portability. They

would be encouraged to grant licences for portable uses outside the home territory when

they hold the rights for all EU territories, which is generally the case for AV producers.

Their willingness to authorise portable uses would depend on the market power of online

service providers and on the proposed safeguards concerning access to content from

territories other than the MS of residence of the consumer and on the degree of difficulty

to renegotiate licences they may have granted with territorial exclusivity. Portability is

not expected to affect the value of territorial exclusivity, however the authorisation of

portable uses would require changes in licensing contracts based on territorial exclusivity

(portable uses would have to be carved out). Right holders are expected to be reluctant to

authorise portable uses of their content if online service providers do not offer the

sufficient guarantees in terms of authentication procedures, confirmation that the

presence outside the home country is temporary, quality of the service provided to

travelling customers, etc. Also (though it is not evident given the negligible impact of

portability on the territorial exploitation of content), there could be negotiations on

licence fees as right holders could, ask for higher licence fees when authorising portable

uses (claiming additional use of content) while service providers could ask for lower fees

(claiming lower value of their territorial exclusivity). In any case, a substantial change to

licensing fees is not expected. All in all, this option could encourage right holders to

consider adapting their licensing practices; however it is unlikely to generate a consistent

approach across the AV or sports industry. The experience with the Licences for Europe

stakeholder forum shows that in spite of the industry's commitment "to continue to work

towards the further development of cross-border portability”; no visible progress has

been achieved for the portability of AV and sports online services despite two years

having passed in which many online TV and film service providers successfully

introduced out-of-home viewing solutions. The Commission has monitored the market

(e.g. by a systematic analysis of terms of use of online content services) for

developments on portability but saw none except for one development (which falls short

of cross-border portability), i.e. some streaming services offering to consumers the

possibility to download films or TV programmes in their home MS before travelling and

then to access the downloaded content in other MS. The discussions with stakeholders

also confirmed that no progress has been made on the basis of the commitment – this is

in contrast with certain other pledges made in the process of Licences for Europe.114

114 e.g. regarding the digitisation of heritage films or the building the rights data infrastructure, with

regard to which the Commission was informed of the progress made by the relevant stakeholders.

30

Right holders in other sectors (music, e-books and video games) are not likely to be

impacted, in particular if they grant multi-territorial licences to online service providers.

Where this is not the case, this option could encourage the introduction of specific terms

in licensing contracts allowing service providers to offer portability.

Service providers: In the AV sector, online subscription services and pay-TV operators

are likely to be interested in developing a cross-border portability option in order to

improve the service to their customers and better respond to their needs in terms of

mobility. In the future, subscription video-on-demand (SVOD) services are likely to

compete directly with pay-TV operators115

, notably through lower subscription prices.

The development of the portability feature could constitute a competitive advantage for

the “first mover” (SVOD service or pay-TV operator). As mentioned above, there could

be negotiations between right holders and service providers on licence fees but a

substantial change to licensing fees is not expected.

In the sports sector, premium sports content is often exclusively licensed in packages to

broadcasters/service providers, who may be entitled to make the content available across

the platforms, including online.116

For these broadcasters/service providers, their

willingness to offer portability may depend on their ability to offer it for their entire

package, including AV content. As for portability for sports content only, the

broadcasters/service providers may have less competitive pressure to be the "first

mover", if they have exclusive rights to transmit live sporting events in a given territory.

Indeed, such premium sports content is irreplaceable, so service providers are less likely

to lose consumers in a short and medium term due to the lack of cross-border portability.

On the other hand, portability is not likely to lead to higher licence fees because it would

have a limited impact on how the sports broadcasting rights are licensed, i.e. in packages

shaped taking into account the specific demand in a given territory, and because of vast

differences in value of the rights between the primary market and other markets.

In other sectors (music, e-books, games), the impact of this option would be marginal

unless negotiations are deemed important by some service providers to gain legal

certainty from right holders on portable uses.

As explained above, this option could have an impact on the competition between online

service providers in the AV sector and with pay-TV operators, with the first online

services offering portability benefiting from a competitive advantage over the other

services. It would however not affect the competition between service providers in

different MS, if portability is offered on the basis of a residence requirement. This option

would not have any impact on employment. For service providers that are SMEs, the

specific impacts are proportionally higher costs (see below).

Consumers: This option could bring benefits for consumers in terms of the higher

number of portable online content services offering AV content and premium sports

115 Up to now it seems that pay-TV services have withstood the arrival of new online subscription

services. For example, despite the launch of Netflix in the UK in 2012, BskyB maintained constant

10.6million subscribers between 2012 and 2013. The main reason would be that most viewers

consider online subscription services as a complementary offer to pay-TV services (notably because

pay-TV subscriptions also offer sports programs). Another possible explanation would be that the

development of AV online services is based on a new market segment and viewer profile (mainly

young people). See "Creating growth – Measuring cultural and creative markets in the EU", EY,

December 2014, at:

http://www.ey.com/Publication/vwLUAssets/Measuring_cultural_and_creative_markets_in_the_EU/$

FILE/Creating-Growth.pdf 116 E.g. the UEFA sells its broadcasting rights on the platform neutral basis; Sky Deutschland acquired the

exclusive pay-TV rights for all live Bundesliga and 2nd Bundesliga matches from the 2013/14 to

2016/17 season in Germany, which covers the rights for all platforms; see also Annex 4.

31

content. However, this development would likely be slow and heterogeneous, as it would

depend on the willingness and possibility of online service providers to offer portability

and on the result of their negotiations with right holders. In some cases, online service

providers may only be in the position to offer portability for certain types of content (for

which right holders would have granted a licence covering portable uses) but not for their

entire catalogue.

This option could potentially result in higher prices for consumers compared to the

current situation, because of the combined effect of the potential increase in licence fees

(see above), administrative costs of renegotiations of contracts and potential cost of

technical improvements to the service (see section on efficiency). In this case, online

service providers could decide to pass these costs through to the consumers. Their ability

to increase prices is however likely to be limited by the competition between the different

market players (in particular SVOD services and pay-TV operators). As portability

becomes a standard feature (like in, for instance, music) the possibilities to charge

additionally for it will diminish.

The impact of this option on consumers' access to the portability of music, e-books and

games online services is expected to be marginal, as portability is already offered in most

cases, either on the basis of multi-territorial licences, or through territorial licences

allowing a limited “overspill” in other territories.

Efficiency

This option could entail significant transaction costs for those right holders and online

service providers in the AV sector who decide to follow the Commission's guidance and

offer cross-border portability. This would generate administrative costs related to the

review of licences and terms of services. To allow for portable uses in other territories,

on the one hand, right holders would need to adapt all the contracts they have with

distributors in the different territories where their content is licensed. On the other hand,

online service providers may need to negotiate with a high number of right holders or

intermediaries (distributors, online aggregators of rights) in order to obtain the necessary

rights for ensuring the portability of their entire catalogue. Aggregators of online rights117

could play an active role to limit these costs, by negotiating directly with right holders

and ensuring to online service providers the licensing of rights including portability.

Costs associated to the renegotiation of contracts are very difficult to estimate as they

would, among other things, depend on the number of parties involved, the extent of

changes that parties would want to introduce and on the current practices of online

service providers (e.g. with regard to authentication tools). As regards sports content,

taking into account the way how the sports broadcasting rights are licensed (in packages

and for a certain number of sporting events/seasons), the administrative costs related to

the review of licences and terms of service may be less significant.

Negotiations may result in higher licence fees (see above) and in a set of safeguard

measures, required by the right holders, which service providers would have to

implement if they want to ensure portability118. This could entail some technical costs for

online service providers (e.g. strengthening of their authentication measures, use of

content delivery networks to improve the quality of the content delivered to users etc.)119

.

Depending on their size and on their customer base, certain AV online services,

especially SMEs may prefer not to engage into such negotiations in order to limit the

117 Services of intermediaries whose purpose is to negotiate with rights holders of different films in order

to create a catalogue that is attractive for VoD platforms. 118 These are explained in Option 3. 119 These are explained in Option 3.

32

transaction costs. In particular, their lower bargaining power may result in worse deals

for them than for larger players which can reduce their competitiveness.

The potential benefits delivered by this option could be for consumers (i.e. higher

number of portable AV and premium sports content services) but they are expected to be

limited as this option is unlikely to lead to a consistent change in the commercial

practices of the industry.

This option would have no compliance costs for other stakeholders or in other sectors.

Coherence with other EU policies

Cultural diversity: This option would not have impact on the production of culturally

diverse content. Slight benefits may be expected in terms of enhanced access to cultural

content as the current users of some online content services would have better access to

some of the content they have acquired online while travelling in the EU. It is unlikely

that heterogeneous cross-border portability would attract new consumers to online

content services.

Fundamental rights: This option would not have any impact on copyright as property

right or on the freedom to conduct a business, as right holders and service providers

would remain free to decide whether to follow or not the Commission’s guidance.

Third countries, trade and environment: This option would not have any impact on

third countries and trade or on the environment. It also does not affect the EU's and the

MS's international obligations.

Option 2 – Legal mechanism to facilitate the cross-border portability of online

content services in the EU

Effectiveness

Content industries: The impact of this option on right holders would depend on the

existing licensing practices in place in the different content sectors and on the bargaining

power of right holders vis-a-vis service providers. The most affected, in terms of the

manner in which the content is licensed, would be AV and premium sports content

sectors.

Producers of AV works and sports organisers (as far as premium content is concerned)

could continue to license this content on an exclusive territorial basis but no separate

licence from them would be required for a service provider to offer portability of its

services to consumers who are temporarily present in other EU countries. In principle, a

provider could offer such portability across the EU based on a licence for one EU MS.

However, as right holders and service providers would be free, within the limits of

competition law, to limit or prevent the cross-border portability of online content

services, the actual application of the legal mechanism would depend on the outcome of

contractual negotiations between the parties as well as on the commercial decisions of

service providers. Negotiations between the parties would be facilitated in the sense that

the solution for cross-border portability would be ready in the form of the legal

mechanism, only conditions of its application could be negotiated.

Right holders are expected to be reluctant towards the legal mechanism if online service

providers do not offer the sufficient guarantees in terms of authentication procedures,

confirmation that the presence outside the home country is temporary, quality of the

service provided to travelling customers, etc. Also (though it is not evident given the

negligible impact of portability on the territorial exploitation of content), there could be

negotiations on licence fees as right holders could, ask for higher licence fees when the

legal mechanism applies (claiming additional use of content) while service providers

could ask for lower fees (claiming lower value of their territorial exclusivity). Right

33

holders willingness to allow portable uses would depend on the market power of online

service providers and on the proposed safeguards concerning access to content from

territories other than the MS of residence of the consumer.

As regards ongoing contracts, right holders would be in a stronger position as without

their agreement the legal mechanism would not be triggered. As regards new contracts,

the position of right holders would be weaker as the legal mechanism would apply and

right holders wishing to limit its effects would have to introduce appropriate provisions

in their contracts with service providers. Right holders could also opt not to license the

online content at all or not license it on the portable basis. If right holders prevented

portability, the option would not have any impacts on them. In cases where service

providers would be able to resist the demands of right holders, the decision whether to

provide portability of online content services would rest only with service providers. If

service providers decide to use the legal mechanism, limited impacts as described below

for right holders would arise. In any case, as the cross-border portability of online content

services does not extend the range of users of the service, i.e. it merely allows the current

users of the service to use it while temporarily present in other MS, the expected impact

on the industry would be marginal.

Impacts arising if service providers use the legal mechanism

On the one hand, the portability feature may attract more consumers, especially those

that frequently travel, to subscribing to or purchasing AV or sports online content

services and could result in more revenues for right holders. Also, the right holders

licensing works on a per-use basis (e.g. where the licence fee depends on the number of

streams by users of a service) are likely to generate additional revenue in case of

increased uses by subscribers as well as from transactional services as consumers would

be more willing to purchase or rent online content while travelling in other MS.

On the other hand, it cannot be excluded that as the result of this option, the affected

customers would be less likely to use local services (especially advertisement-financed or

transactional AV or sport services as these are more likely to be used by persons staying

only temporarily in the given MS) in the MS to which they travel. This would not have

an impact on revenues from services which are advertisement-based as occasional

viewing does not generate any advertisement revenues and therefore the loss of such

viewing is neutral for the service. On the other hand, there could be potential marginal

decrease in revenues of local services that are transactional and this in turn could reduce

the revenues of the AV producers (depending on the structure of fees payable to

producers). However, such effect would be limited to the cases where different right

holders have the rights for different territories for the same piece of content. This is not

necessarily the case in the area of AV and premium sports content as rights tend to be

held by a single right holder (unless e.g. rights are split between co-producers, in case of

films, or sub-licensed, in case of sports). Moreover, the revenues of the holders of rights

would be compensated by higher revenues from the increased use of services as

mentioned above. Finally, the scenario based on the assumption that a consumer could

buy content in a visited country is theoretical, especially if the temporary stay is short:

few consumers would engage in exploring a new market for content services (especially

in languages they do not know). Therefore, no (or negligible) negative impact on AV and

sports right holders' revenues is expected. Incentives to create and produce for right

holders would therefore remain unchanged.

The impact on AV industry's and sports organisers' possibility to exploit content on a

territorial basis could be negative if customers residing in other MS than the MS in which

the service is offered would be able to use the portability functionality to access the

service in the MS of their actual residence (i.e. the portability function would be used to

achieve a cross-border access to content). However, such risk could be averted by the use

34

of adequate authentication mechanisms which would ensure that the service is provided

only to those customers who are residents of the MS in which the online content service

is provided and that the stay in other MS is indeed temporary. As mentioned above, the

possibility of imposing requirements as to authentication tools would depend on the

bargaining power of right holders vis-a-vis service providers.

The impact of this option on the industry would be very limited in the music, book and

games sectors where generally the licensing practice is not an obstacle to portability. In

these sectors this option would mainly deliver legal certainty for market participants.

In the music sector, the fact that most online services, including local services, already

grant portability and that generally right holders do not grant a separate licence to service

providers for use of works in additional territories on a temporary basis, suggests that

right holders in the music sector view possible impacts of portability as negligible. This

is despite the fact that contrary to AV and sports, in the music sector rights are often held

by different right holders in different territories and different CMOs are often involved in

the management of these rights and therefore theoretically right holders holding rights in

the 'visited market' could be affected as customers would be less likely to use local

services in the MS to which they travel. The impact is however limited as the effects in

the 'visited' market are minimum. As mentioned above, the scenario according to which a

consumer could buy content in a visited country seems theoretical, especially if the

temporary stay is short: few consumers would engage in exploring a new market for

content services. Moreover, if consumer demand for online services was to increase

thanks to the portability feature, revenues for right holders would also increase (the

licence fees that right holders receive would increase as well in cases where they are, at

least partly, calculated on the basis of revenue per stream). In cases of lump sum

payments, the revenue would remain unchanged.

This option is not likely to have a significant impact on the right holders in the e-books

sector. Firstly, in most cases an e-book is downloaded to the reader's device, and the

providers of subscription-based services typically offer portability. Secondly, rights to e-

books are granted on a per-language rather than per-territory basis, therefore in most

cases the current licensing contracts do not prevent access from another MS.

The same applies to the video games sector, where already now right holders are not

restricting access to online video games from abroad. Service providers delivering video

games through streaming are likely to continue offering portability of such video games,

including across borders.

Service providers: Under this option, service providers would benefit from the legal

fiction applicable to the licensing of the rights, unless agreed differently with the right

holders. They would not be obliged, however, to ensure that consumers can benefit from

cross-border portability.

In the AV sector, the availability of cross-border portability to consumers would depend

on service providers' business decisions and their bargaining power towards right

holders. The right holders' possibility of imposing increased licence fees would depend

on their assessment of the impact of portability on the existing business models and on

the bargaining power of the service providers. It cannot be excluded that the fact that the

service provider has a choice whether to offer cross-border portability or not could result

in pressure from right holders to increase licence fees due to an increased functionality of

services if the service provider opts to offer portability. Even though cross-border

portability would not increase the size of audience, the fact that the service provider has a

choice whether to offer it or not may turn the portability function into a provider's

competitive advantage which thus could arguably be monetized. Therefore, the right

holders could ask for a share of such perceived value. At the same time, service providers

could ask for lower fees claiming lower value of their territorial exclusivity. It is

35

therefore not entirely evident that right holders would demand an increase of licence fees

or that they would succeed in raising such fees.

The potential increase in licence fees could have more negative impact on smaller

providers than on larger ones as the larger ones would have stronger bargaining power

vis-à-vis right holders and would be in a better position to absorb the increased cost of

licence fees. However, given the limited effect of the portability feature on the territorial

exploitation of rights, it is expected that such increase, if any, would not be significant.

As concerns sports content, portability is not likely to lead to higher licence fees because

it would have a limited impact on how the sports broadcasting rights are licensed, i.e. in

packages shaped taking into account the specific demand in a given territory, and

because of vast differences in value of the rights between the primary market and other

markets.

As mentioned above under Content industries, it cannot be excluded that the consumers

benefiting from portability would be less likely to use local – especially AV transactional

- services in the visited MS. However, as explained above, such scenario is rather

theoretical, especially if the temporary stay is short.

Music, e-books, and games payment-based online services which do not offer portability

yet could benefit from the legal certainty because they would be sure not to infringe

copyright laws or their licences with right holders in any of the MS by granting

portability.

Consumers: This option could bring benefits for consumers in terms of the higher

number of portable online content services offering AV content and premium sports

content. However, this development would likely be heterogeneous and relatively slow,

as the availability of cross-border portability would depend on the outcome of the

negotiations between right holders and service providers. The legal mechanism under this

option would facilitate these negotiations but the decision to provide portability to

consumers would remain subject to the agreement between right holders and service

providers. Consequently, consumers are unlikely to have access to the entire catalogue

offered by a service provider when travelling in another MS in short and even in medium

term.

Like Option 1, this option could also result in higher prices for consumers compared to

the current situation, because of the combined effect of the potential increase in licence

fees, administrative costs of renegotiations of contracts and potential cost of technical

improvements to the service. Nonetheless, the ability of service providers to increase

prices is likely to be limited by the competition between the different market players.

The impact of this option on consumers' access to the portability of music, e-books and

games online services is expected to be marginal, as portability is already offered in most

cases.

Efficiency

Content industries and service providers: As this option does not entail an obligation

to provide for the cross-border portability of online content services there are no costs

directly linked to the intervention. Should service providers decide to rely on the legal

mechanism and offer cross-border portability of their services, potential costs would

concern mainly, if not exclusively, the AV and sports sectors and would be the same as

the costs described in Option 3, i.e. costs of authentication of subscribers, costs of

renegotiation of contracts and service providers' costs related to the use of network

infrastructure. However, as the legal mechanism would apply to the ongoing contracts

only to the extent both parties would agree on such application, the expected extent of

36

such renegotiations is limited.Consumers: The potential benefits for consumers (i.e.

higher number of portable AV and premium sports content services) but they are

expected to be limited as this option is unlikely to lead to a consistent change in the

commercial practices of the industry.

This option would have no compliance costs for other stakeholders or in other sectors.

Coherence with other EU policies

Cultural diversity: This option would not have any impact on the production and offer

of diverse cultural content. As mentioned above, indirect substitution effects would be

non-existent or marginal as consumers while temporarily present in other territories

typically do not subscribe to online content services. Limited benefits can be expected in

terms of enhanced access to cultural content as current users of some online content

services (and possibly only with regard to some content) would have a better experience

of the content they have acquired online through easier access while travelling in the EU.

It is unlikely that heterogeneous cross-border portability would attract new consumers to

online content services.

Fundamental rights: This option would have a limited impact on copyright as property

right and on the freedom to conduct a business, as recognised in the European Charter of

Fundamental Rights (Articles 16 and 17). However, the measure would be justified in

view of the Treaty fundamental freedom to provide and receive services across

borders120

. Restricting the above-mentioned freedoms (through the legal fiction) would

be justified in light of the objective of facilitating cross-border portability of online

content services for European consumers. The initiative would only affect these freedoms

in a very limited manner (i.e. right holders holding rights in MS in which consumers are

temporarily present would neither be able to prevent the provision and use of online

content services in their territories nor to benefit from them) under very limited

circumstances, i.e. to facilitate portability of online content services which have already

been subscribed to or purchased/rented by consumers. It would not have any significant

impact on the revenues of either right holders or service providers or on business models

based on territorial exclusivity. In addition, given that the disadvantages caused to right

holders would be of a very limited scope while consumers would be afforded a clear

benefit of enhanced access to online content services across the internal market, the

measure is not disproportionate to the aims pursued. It would not go beyond what is

necessary to facilitate portability in all content sectors. The above arguments also apply

to any possible affectation of the right of consumers to the protection of their personal

data (Article 8 of the Charter). Service providers are likely to use some tools for the

verification of the temporary nature of the consumer's stay in another MS but this would

only require an occasional check of the MS in which the consumer is present121

and

should be carried out in line with the requirements for legitimate data processing in

Directive 95/46/EC (Article 7).

120 Article 52(1) of the Charter allows for restrictions interfering with the exercise of the freedoms of the

Charter: those restrictions (i) must be provided for by law and (ii) respect the essence of those rights

and freedoms. In addition, the limitations are (iii) “subject to the principle of proportionality” and

“may be made only if they are necessary and genuinely meet objectives of general interest recognized

by the Union or the need to protect the rights and freedoms of others” 121 The verification of the temporary nature of the consumer's stay in another MS does not require the

permanent control of his location or any information on his precise location, only an occasional check

as to in which MS he is present.

37

Third countries, trade and environment: This option would not have any impact on

third countries and trade or on the environment. It also does not affect the EU's and the

MS's international obligations.122

Option 3 – Intervention to ensure the cross-border portability of online content

services in the EU

Effectiveness

Content industries: The impact of this option on right holders would depend on the

existing licensing practices in place in the different content sectors. The most affected, in

terms of the manner in which the content is licensed, would be AV and premium sports

content sectors.

Producers of AV works and sports organisers (as far as premium content is concerned)123

could continue to license this content on an exclusive territorial basis but no separate

licence from them would be required for a service provider to offer portability of its

services to consumers who are temporarily present in other EU countries. A provider

could offer such portability across the EU based on a licence for one EU MS and the

right holders would not be able to prevent it. This would affect the way in which the

harmonised rights are exercised as right holders granting a licence in a territory would

know that such a licence will allow for the portability of services to the other MS and

those holding rights for the territories in which customers would stay temporarily and

enjoy portability of their home MS online content service would not be able to prevent

such a service provider from offering its service to its customers. It would be a notable

change as far as the premium content is concerned as currently such online services do

not offer portability or offer limited cross-border portability.124

However, as the

portability of online content services does not extend the range of users of the service, i.e.

it merely allows the current users of the service to use it while temporarily present in

other MS, the expected impact on the industry would be marginal.

More detailed impacts are identical to impacts described under Option 2.

Impacts arising if service providers use the legal mechanism. Under Option 3 however

right holders would be limited in their possibility of imposing authentication tools on

service providers by proportionality and necessity provisions.

Service providers: Under this option, service providers would benefit from the legal

mechanism applicable to the licensing of the rights and be able to better respond to their

customers' needs by granting cross-border portability of their online services. If the

service is provided in exchange of remuneration, the service provider would be obliged

to ensure cross-border portability. If the service is provided free of charge, the provider

would only be obliged to enable the cross-border portability if the provider can verify the

subscriber's MS of residence on the basis of information or other means readily available

to the provider. If a service provider offers free of charge services without such

verification, they would not be obliged to ensure portability.

In the AV sector, similarly as in Option 2, it cannot be excluded that right holders may

make pressure on service providers to increase licence fees due to increased availability

of services (despite the fact that portability only concerns consumers that are entitled to

receive the service in their MS of residence). However, contrary to Option 2, because

122 Persons who are not residents in any MS would not benefit from the intervention when travelling in the

EU. 123 For other (not premium) AV and sports content, the impact of this option would be insignificant as

rights to such content are licensed without exclusivity. 124 See examples provided in problem definition.

38

portability would not be a choice but an obligation, the pressure to increase the licence

fees would be smaller. Right holders could not rely on the fact that portability is an

additional or optional functionality. Therefore, portability would not be perceived as a

competitive advantage which could be monetized in the same was as it could be under

Option 2.

As in Option 2, the possibility of imposing increased licence fees would depend on the

parties' assessment of the impact of portability on the existing business models and on

their bargaining power. However, given the limited effect of the portability feature on the

territorial exploitation of rights and its binding nature, it is expected that such increase, if

any, would be marginal and even less significant than under Option 2. Also, right holders

rely on a diversified distribution system comprising both bigger and smaller service

providers. Therefore, it is unlikely that they would undermine the competitive position of

smaller providers by their fees policy, especially because smaller providers would not

have a choice but would be obliged to offer portability to consumers. As a result, all

service providers could offer a better product which could attract more customers.

As concerns sports content, similarly as in Option 2, portability is not likely to lead to

higher licence fees because it would have a limited impact on how the sports

broadcasting rights are licensed.

A number of service providers have expressed support for cross-border portability of

online services125

but are usually in favour of industry-led solutions and soft law

instruments as opposed to legal obligations in this area.

Music, e-books, and games payment-based online services which do not grant portability

yet could benefit from this option as they would be able to offer a better service to their

customers. The impacts of this Option to these industries are equivalent as in Option 2.

Moreover, in the longer term this option would ensure that even if right holders change

their current licensing practice in a way that applies more territorial restrictions than

today, service providers in these sectors could always offer cross-border portability to

their consumers.

This option could have limited impact on the competitiveness of online service providers

in the AV sector, as the ability to absorb the indirect costs of providing portability (see

below) would depend on their size and on their geographical coverage of EU MS.

However, such costs are not expected to be significant. This option is not likely to affect

cross-border competition, as consumers would not be able to subscribe to an online

service offered in another MS on the basis of portability. This option is not expected to

have any impact on employment.

Consumers: This option would respond to consumers' demand to continue their access

to online content services when they travel in the EU. Accordingly, this option would

respond to the increasing mobility of consumers and their willingness to access content

from anywhere. Based on the results of the recent Eurobarometer survey on cross-border

access to content and the results of a previous Eurobarometer survey carried out on

tourism, approximately 5.7% of European consumers would potentially be "portable

users" of online subscription services and this could reach approximately 14% by 2020

(see Section 2). Consumers would be able to use their subscription-based online content

services while staying temporarily in another MS. It would also allow consumers to

access the online content they have acquired or rented (or to acquire or rent more

125 See e.g. the EDIMA

http://www.europeandigitalmediaassociation.org/pdfs/EDiMA%20positioning%20on%20territoriality.

pdf or Cable Europe http://www.cable-europe.eu/

39

content) from the MS where they are temporarily. Moreover, as the measure would apply

also to the existing subscription-based and transactional services, all consumers (whether

already using online content services or not) could benefit in an equal manner and at the

same time.

This option would result in the substantial increase in convenience for consumers as

regards AV content. It could generate a greater interest in online AV services, in

particular subscription services.

In the sports sector, this option would bring substantial benefits for consumers. It would

enable them to watch "home" content while travelling in the EU which is of particular

importance in this sector given that the value of sports content lies in it being viewed

'live', including with commentary focusing on their home team and targeted interviews.

In the music sector, this option could produce some benefits for consumers, if they have a

subscription to a music online service which currently does not offer portability or offers

portability in practice but this practice is not in line with the terms of use signed by the

consumer. In the e-books and games sectors, consumers are not likely to be significantly

affected by this option. In principle, where a particular service is not providing the

portability feature yet, its introduction would respond to the needs of the increasingly

mobile consumers, creating extra value for them. In these sectors, this option would

make sure, even in the long term, that consumers always have cross-border portability of

the services available, even if right holders or service providers decided to introduce

more territorial restriction in their future contracts.

Finally, a significant number of Member States have already expressed their support for

an EU initiative on cross-border portability while a couple of them appear more inclined

to support industry-led solutions.126

Efficiency

Content industries and service providers: Potential costs related to the offering of

portability of online content services could concern mainly, if not exclusively, the AV

and sports sectors and can be divided between potential costs directly related to the

intervention, i.e. service providers' potential costs of authentication of subscribers and

costs which may arise but are only indirectly related to the intervention, i.e. costs of

renegotiation of contracts and service providers' costs related to the use of network

infrastructure.

1. Costs directly linked to the intervention - potential costs of authentication of

consumers

The measure would in practice require modifying the current geo-blocking where such

geo-blocking is used, i.e. re-configuring authentication tools from the geo-blocking

approach to the temporary access approach. This does not necessitate the acquisition of

new technology and would therefore result in none or marginal administrative cost. The

measure would not require service providers to use any authentication tools but would

leave this matter to arrangements between holders of relevant rights and service

providers. At the same time, this option would include appropriate safeguards relating to

the proportionality and necessity of the requirements potentially imposed by right holders

to ensure that such requirements would be adequate for the objective of authentication

and would not result in an excessive burden on service providers. In addition, service

providers would have to comply with the requirements for legitimate data processing in

Directive 95/46/EC. It is assumed that the MS of residence checks, even if not imposed

126 E.g. UK: https://engage.number10.gov.uk/digital-single-market/, France:

https://m.contexte.com/docs/6431/position-francaise-sur-le-marche-unique-du-numerique.pdf

40

by the measure itself, would be carried out (due to the residence requirement) in the AV

and premium sports content sectors and that they would go beyond requesting of

consumers' to make a declaration as to their Member State of residence. Most likely such

checks would occur at the moment of activating the subscription/purchase/rent of online

content and would be carried out by the use of proxies such as banking details, the

existence of broadband or telephone connection or IP address.

Currently online content service providers in all sectors use different techniques to verify

the MS of residence of a customer. The basic method is to check whether the user's IP

address is in the national registry. In addition methods such as checking address, credit

card information or geolocation data of devices are used. The vast majority (if not all) of

affected service providers already has such authentication mechanisms in place and could

maintain them. The cost of implementing such authentication tools would only relate to

the limited cases of providers that do not have such mechanisms in place. IP address

authentication can be achieved at a relatively low marginal cost since it consists in a

limited (software) processing function (usually performed centrally) using a managed set

of parameters such as a blacklist or whitelist at the main server site against the address is

checked. Despite our enquiries addressed to the affected industries, we have not received

any information allowing us to quantify the potential costs related to authentication tools.

As indicated above, the extent of costs would depend on whether and what authentication

tools are already used by service providers and the cost would further vary depending on

the parameters used for the authentication. In the context of Licences for Europe

stakeholder dialogue, the network of independent VOD platforms EuroVoD stated: "The

EuroVoD platforms can propose to their subscribers to have access to films available

within their SVoD offers, when travelling abroad. This type of access is technically

possible for the web-based services developed and operated by the EuroVoD

platforms."127

which would suggest that VOD service providers already have the

technical feasibility to provide portable services (including the authentication tools).

The mechanism envisaged in this option would mean that the legal fiction would apply as

long as the consumer in question would continue to be a resident of the MS in which the

service is offered, the consumer would access the service in the EU and the stay in

another EU MS would be temporary. All these conditions would have to be satisfied at

the time of consumption of content. Therefore it would be possible that, despite the lack

of such obligation in the measure itself, content owners in AV and sports sectors would

insist on more accurate and more costly methods of authentication to be used by service

providers to effectively verify the user's identity and uses (mainly periodic checks on

user logs based on IP address) and avoid any fraudulent activity. Such a software check

on the user logs is routine and does not entail significant costs. Moreover, the measure

would ensure that requirements imposed by holders of rights would not exceed what is

necessary and proportionate. As mentioned above, service providers would have to

comply with the requirements for legitimate data processing in Directive 95/46/EC. As

regards sectors in which portability is already provided, i.e. music, e-books and games, in

the short term, no cost related to the authentication is expected as the intervention would

not create a new situation for these sectors (portability would continue to be provided on

the same terms). Costs could arise in longer term if licensing practices of right holders

would change, e.g. rights would be granted on an exclusive basis. In such a case, the

same considerations as applying to AV and sports sectors would apply to these sectors.

127 https://ec.europa.eu/licences-for-europe-dialogue/sites/licences-for-europe-

dialogue/files/EuroVoD%20Statement.pdf

41

In addition, content service providers in AV and sports sectors themselves might be

interested in using more accurate methods authentication e.g. to avoid/reduce any risk of

licensing lawsuits. For example, EuroVoD, in the statement referred to above explains:

"In order to enable cross-border access, the EuroVoD platforms can apply a combined

identification of the subscribers – through their IP (geolocation) and through their user’s

account (bank card used for payment). When subscribing to the service, users declare

their country of residence as the same as the territory where the platform operates and

accept the Terms and Conditions of use of the service. At this stage, users are identified

through their IP and they can also pay with a foreign bank card. When travelling

abroad, users can have access to the SVoD offer they have subscribed to, thanks to an

identification through their user’s account and bank card. If consumption is done

exclusively from abroad for a certain period of time, users receive alerts and warnings

for non respecting the Terms and Conditions of use. The access to the service can be shut

down." This implies that VOD platforms foresee the application of not only

authentication tools but also IP address checks allowing verifying whether the presence

of a customer in a given MS is indeed temporary.

In conclusion, costs directly linked to the intervention are not expected to be significant

and could be absorbed in the routine software maintenance costs of service providers.

Moreover, it has to be kept in mind that most of the authentication/identification methods

can be circumvented. Economically the most important effect of using more accurate

checks resides in raising the direct and indirect costs of circumvention to an extent that it

is no longer attractive for a substantial number of users. Since both right holders and

service providers have a shared interest in generating revenues from subscribers and

advertisers it can be expected that the market dynamics will lead to a suitable path of

technological improvements which would balance the interests of increasing security and

generating additional revenues from legal content distribution.

2. Costs which may arise but are only indirectly related to the intervention

(i) Potential costs of renegotiation of contracts

In order to ensure that all EU consumers (whether already subscribers to online content

services or not) could enjoy the cross-border portability feature without any delay, at the

time when the measure becomes applicable, the measure would also apply to the ongoing

contracts for online content services between right holders and service providers and

between service providers and consumers. Application to existing contacts is also

necessary because otherwise, due to the typical long duration of the contracts especially

in the AV sector128

, cross-border portability would become a norm for some pieces of

digital content before others. This would require service providers to "black out" parts of

their service which would reduce its attractiveness.

Despite the fact that the intervention would apply to the existing contracts, the

mechanism foreseen in this option would not require holders of rights and service

providers to renegotiate such contracts and therefore there is no associated administrative

cost. The legal fiction would apply to the existing contracts and the currently existing

clauses that require that service providers geo-block their services and provide such

services solely in their national territories would be interpreted (without the need of

amendments) in the light of the new rules i.e. such clauses would not apply to cross-

border portability. It cannot be excluded that holders of rights and service providers

would want to renegotiate the existing contracts nonetheless to e.g. adjust the licence fees

or amend the authentication requirements but that would be their own decision and not a

necessity linked to the intervention under this option.

128 The duration of licences in the AV sector is estimated for 3-10 years with the average of 4-7 years.

42

In addition, in certain cases (especially in regard to AV and premium sports content)

online service providers would also need to review the terms of use of their services,

including with respect to existing contracts. As adding cross-border portability to the

service would be for the benefit of consumers (assuming no change to the price of

subscription), it could be easily introduced and the only related cost would be the

administrative cost of notifying the affected consumers (which is normally done by email

or on the website itself). In addition, as only consumers who are residents in a certain MS

can benefit from the legal fiction and consequently from cross-border portability, those

service providers that do not currently check the MS of residence of their consumers and

would need to rely on the legal fiction would have to carry out this check during a

transitional period and possibly offer different terms for their existing (and future)

consumers on this basis.

Costs associated to the renegotiation of contracts are very difficult to estimate as they

would depend on various factors such as the number of relevant contracts, the extent of

changes that parties would want to introduce, the current practices of online service

providers (e.g. with regard to authentication tools) and the duration of the given

contract.129

It is expected that the longer the duration of the contract, the more important

would be for the parties to renegotiate its terms. We have not been able to obtain any

estimation of such costs.

This option could also result in savings for those holders of rights that would be willing

to license their rights in such way that ensures their portability and who, in order to

achieve that, would have had to amend numerous agreements that they have entered into

with distributors and service providers in various territories (as such agreements provide

for territorial exclusivity, all of them would have to be amended in order to license a

provider rights with portability function). This option allows such holders of rights to

change their licensing practices without having to amend the existing contracts. By the

same token, this option could result in savings for service providers who would not have

to amend contracts they entered into with various right holders and distributors.

(ii) Potential costs related to the use of network infrastructure

This option does not set legal requirements with regard to the quality of the service

delivered in the MS other than the MS of residence of the consumer. This means that

service providers are not obliged to adapt the technical infrastructure in order to ensure

the same quality of service across borders and therefore there is no associated

administrative cost.

Service providers (especially bigger AV content service providers, including premium

sports content providers) may see a need (e.g. due to reputational considerations) to adapt

the technical infrastructure in order to ensure the same quality of service across

borders.130

If service providers see a need to adapt the technical infrastructure, it might

lead to more substantial costs (e.g. the cost of upgrading the internet connection of the

origin server in terms of bandwidth or traffic volume or the cost of content delivery

networks (CDN)131

). Such costs would be substantial if providers of AV content services

decide to invest in CDN in order to ensure quality of their service also when accessed in

other MS. Allowing portable uses without ensuring the same or comparable user

129 Based on information obtained from the stakeholders it seems that the duration of contracts in the AV

sector is between 3 and 10 years (depending e.g. on the type of content and the type of the service

provider) with the average at 4-7 years while the duration of contracts for sports content seems to be

generally shorter but also varies. 130 See Annex 8 for the description of technology used for the delivery of online content services. 131 A CDN allows faster delivery of content by using the servers closest to each user and therefore to

increase the quality of the streamed content – see Annex 8 for more information.

43

experience may not be seen as an acceptable option to bigger service providers, but also

to right holders as it could affect the way in which their content is distributed. One study

analysed the impact of speed and online video quality on user behavior and found that

delays in starting up a video or interruptions could increase abandonment rates and result

in loss of viewership.132

Right holders may therefore try to impose on service providers

requirements concerning quality of service provided to customers temporarily present in

other MS.

Costs associated to the use of CDN for portable uses are very difficult to estimate as they

would depend on the current practices of online service providers (whether they already

use a CDN or not) and on the volume of data transferred and stored (which would vary

according the volume of portable uses by consumers).133

Moreover, CDN is not the only

technical means to ensure quality of video services. Some providers134

use the less

expensive peering technologies, which use end-users' devices as content storage points.

Also, the whole content delivery segment is characterised by intense technological and

business innovation, meaning that the present content delivery infrastructure costs are

likely to go down, and online content service providers are likely to have - depending on

the nature and scale of their services - an even greater choice of content delivery options.

Impact on SMEs (including micro-enterprises)135

: While the costs described above

could put proportionally more burden on SMEs than on large businesses (which is also

the case for the day-to-day business of SMEs), the negative consequences of exempting

them (or even micro-enterprises) are likely to outweigh the savings in costs: as

consumers become increasingly aware of the requirement to provide cross-border

portability, they are likely to start seeing it as a "must-have" feature of online content

services, and the inability of smaller online service providers to provide that feature

might result in a serious competitive disadvantage. Furthermore, costs directly related to

the intervention are expected to be marginal since all service providers covered by the

initiative already provide for subscription-based or transaction-based services online and

thus already apply some form of authentication mechanism. Including SMEs (including

micro-enterprises) in the scope of this exercise would probably be the only way to enable

them to align their offers and provide portability to their customers (as the cost of

renegotiating all existing contacts with right holders could be too high for SMEs), thus

contributing to their competitiveness on the market. Moreover, exempting micro-

enterprises from the scope of the rules is likely to undermine the efficiency of the

measure, considering that many online content service providers are micro-enterprises.

No data on the percentage of micro-enterprises among providers of online content

services is available, however the creative industries in the EU are dominated by micro

132 "Video Stream Quality Impacts Viewer Behavior: Inferring Causality Using Quasi-Experimental

Designs", 2012: https://people.cs.umass.edu/~ramesh/Site/HOME_files/imc208-krishnan.pdf. The

study found that "viewers start to abandon a video if it takes more than 2 seconds to start up, with each

incremental delay of 1 second resulting in a 5.8% increase in the abandonment rate" and that "a viewer

who experienced failure is 2.32% less likely to revisit the same site within a week than a similar

viewer who did not experience a failure." 133 A survey carried out by one streaming media technology expert on the costs of CDN for video

delivery found that 77% of CDN customers are spending $250K per year or less, while 11% are

spending between $250 and $500K, 6.5% between $500K and $1M and 5% over $1M per year. It also

showed that there was a 20-25% decline in pricing on 2013 and this trend is expected to be confirmed

for 2014 and 2015; see "The State Of The CDN Market: Video Pricing, Contract, Volume and Market

Sizing Trends", Dan Rayburn, http://www.streamingmedia.com/dansblog/2014CDNSummit-

Rayburn.pdf 134 E.g. Voddler 135 An enterprise that has less than 10 employees and its turnover or balance sheet total does not exceed

EUR 2 million (Commission Recommendation 2003/361 concerning the definition of micro, small and

medium-sized enterprises)

44

firms with 95% having fewer than 10 employees, the overwhelming majority (90.8%) of

the value added generated within the EU-27’s film and sound recording activities sector

in 2010 was provided by SMEs, which employ just over three quarters (75.4%) of the

total number of persons employed in the sector.136

In the recorded music industry, 99%

of music businesses are SMEs.137

Consumers: Impact of the intervention on consumer prices is directly linked to the

potential costs associated with the intervention that service providers may bear – if such

costs arise, service providers would be expected to pass them on to consumers. As

described above, potential costs encumbering service providers are limited (assuming no

changes to licensing practices) to AV and premium sports content sectors. In

consequence, the possibility of an increase in consumer prices is also limited to these

sectors. On the one hand, as described above, it cannot be excluded that right holders in

such content succeed in increasing licence fees for service providers (which is less likely

for sports content). This will to a large extent depend on the bargaining power of service

providers vis-à-vis right holders. The ultimate outcome of such potential negotiations

over licence fees is very difficult to predict and in any case, given the limited effect of

the portability feature on the territorial exploitation of rights, it is expected that an

increase, if any, would be marginal. On the other hand, service providers may have to

bear the above-described costs of authentication tools, the costs of renegotiation of

contracts and the costs of the use of networks. As explained above, only the costs of

authentication tools are directly linked to the intervention. These costs are estimated as

marginal. It cannot be excluded that in the AV content sector the combined impact of the

potential increase in licensing fees (even if marginal), authentication tools (even if

marginal) and the indirect costs (the costs of renegotiation of contracts and the costs of

the use of networks) would amount to an increase in prices for consumers. At the same

time, the ability of online service providers to raise prices would be limited, notably due

to the consumers' willingness to pay, to the competition with other market players and

due to the constraining effect of illegal websites distributing online content and therefore,

the potential increase of consumer prices, if any, is not expected to be significant.

Finally, as explained above, the possible need to check the MS of residence of consumers

in order for them to benefit from cross-border portability might result in some

inconvenience (and marginal cost) for the consumers in the case of those service

providers which do not currently check such residence.

Coherence with other EU policies

Cultural diversity: This option would not have any impact on the production and offer

of diverse cultural content. As mentioned above, indirect substitution effects would be

non-existent or marginal as consumers while temporarily present in other territories

typically do not subscribe to online content services. However, benefits can be expected

in terms of enhanced access to cultural content. Cross-border portability as a part of an

online content service may attract a number of new consumers to access it. It would also

allow existing consumers to have a better experience of the content they have acquired

online through easier access while travelling in the EU.

Fundamental rights: This option would have a limited impact on copyright as property

right and on the freedom to conduct a business, as recognised in the European Charter of

Fundamental Rights (Articles 16 and 17). However, the measure would be justified in

view of the Treaty fundamental freedom to provide and receive services across

136 European Competitiveness Report 2010, 137 Independent music companies Association (IMPALA) comments on the EC consultation on a future

trade policy, July 2010.

45

borders138

. Restricting the above-mentioned freedoms (through the legal fiction, the

obligation to offer cross-border portability as well as by rendering unenforceable any

contractual provisions contrary to this obligation) would be justified in light of the

objective of ensuring cross-border portability of online content services for European

consumers. The initiative would only affect these freedoms under very limited

circumstances, i.e. to ensure portability of online content services which have already

been subscribed to or purchased/rented by consumers. It would not have any significant

impact on the revenues of either right holders or service providers or on business models

based on territorial exclusivity. In addition, given that the disadvantages caused to right

holders and service providers would be of a very limited scope while consumers would

be afforded a clear benefit of enhanced access to online content services across the

internal market, the measure is not disproportionate to the aims pursued. It would not go

beyond what is necessary to make portability an ordinary business practice in all content

sectors, in a manner that allows all consumers to benefit from the measure at the same

time. The above arguments also apply to any possible affectation of the right of

consumers to the protection of their personal data (Article 8 of the Charter). While it is

not an obligation imposed by this option, service providers are likely to apply tools for

the verification of the temporary nature of the consumer's stay in another MS. This

however would only require an occasional check of the MS in which the consumer is

present139

and should be carried out in line with the requirements for legitimate data

processing in Directive 95/46/EC (Article 7).

Third countries, trade and environment: This option would not have any impact on

third countries and trade or on the environment. It also does not affect the EU's and the

MS's international obligations.140

7. HOW DO THE OPTIONS COMPARE?

Effectiveness Efficiency

Coherence

Criteria ►

Policy option▼ Impact on

consumers

Impact on

content

industries

Impact on

service

providers

Costs/

benefits Cultural

diversity

Fundamenta

l

rights

Third countries,

trade,

environment

Baseline 0 0 0 0 0 0 0

Option 1 0/+ 0 0/+ 0/- 0 0 0

Option 2 0/+ 0/+ 0/+ 0/- 0 0/- 0

Option 3 ++ 0/+ -* // +** -* // +** 0/+ 0/- 0

"0" – no change "+" – positive impact "-" – negative impact *short term (<5 years) // **long term (>5 years)

Options 1, 2 and 3 would allow, to a different extent, to respond to the objective of

facilitating the cross-border portability of content within the EU. The effectiveness of

138 Article 52(1) of the Charter allows for restrictions interfering with the exercise of the freedoms of the

Charter: those restrictions (i) must be provided for by law and (ii) respect the essence of those rights

and freedoms. In addition, the limitations are (iii) “subject to the principle of proportionality” and

“may be made only if they are necessary and genuinely meet objectives of general interest recognized

by the Union or the need to protect the rights and freedoms of others” 139 The verification of the temporary nature of the consumer's stay in another MS does not require the

permanent control of his location or any information on his precise location, only an occasional check

as to in which MS he is present. 140 Persons who are not residents in any MS would not benefit from the intervention when travelling in the

EU.

46

each of these options will vary according to the different categories and sectors of

stakeholders involved.

Consumers: Under the baseline scenario, consumers would continue to benefit from the

cross-border portability of music, e-books and games services, but not of AV and

premium sports content which they would continue to have problems accessing while

travelling in the EU. In the longer term, licences (in particular new ones) could allow for

cross-border portability but it is probable that an important part of the content offered by

the service provider could remain locked in the national territory, as service providers

may consider that the partial portability they could offer to consumers (with black-outs)

would not increase the appeal of their service. Option 1 could gradually improve this

situation in the medium to long term, as it would encourage the market participants to

ensure cross-border portability however it is not likely to result in a consistent change of

industry practices, hence its effectiveness would be limited. Option 2 could have a

slightly more positive impact on consumers than Option 1 since the availability of the

legal mechanism would make it easier for right holders and service providers to agree on

portability in the licences. However, its application would eventually depend on the will

of the parties, it would only happen gradually over a longer period of time, and therefore

the scale of the consumer benefits would remain uncertain. Only Option 3 would

effectively ensure that the portability feature is offered by all subscription-based and

transactional online content services and accordingly meet the demand of a high number

of consumers (see Section 2). It cannot be excluded that Options 1, 2 and 3 could result

in higher prices for AV and premium sports content; however this impact is expected to

be limited by the competition between market players and the need to provide an

attractive legal offer to consumers. In the music, e-book and games sectors, Option 3

would mainly improve legal certainty for consumers. In the long term, unlike the other

options, it could also act as a safeguard to ensure that cross-border portability remains

available for consumers despite possibly changing commercial practices of right holders

and/or service providers.

Content industries: Under the baseline option and Option 1, right holders in the AV

sector and, to a lesser extent, for premium sports content are likely to be reluctant to

allow for the portability of their content, therefore progress would be gradual and the

results would be diverse even in the longer term. The guidance foreseen in Option 1

would encourage them to negotiate with online service providers but industry-wide

positive results cannot be expected due to the significant effort requires by right holders

to review the existing network of contracts based on territorial exclusivity. The legal

mechanism in Option 2 would make it easier to the parties to make cross-border

portability available but the decision whether to allow it or not would remain with the

holders of the rights, as in the baseline scenario and in Option 1. They would also be free

to decide what kind of requirements they set for service providers to allow portability.

Therefore, meeting the objective of this initiative would depend on the agreement

between right holders and service providers. Option 3 would provide for a solution to

ensure portability regardless of licensing practices of right holders and therefore would

be the effective in meeting the objectives, including for AV and premium sports content.

If the cross-border portability feature of the online service is considered attractive by the

consumers, Option 3, and to some extent also Option 2, may increase the use of the

service and the income of right holders. In the music, e-book and games sectors, Option 3

would mainly improve legal certainty but would not bring about tangible economic

impacts. The other options would have no relevant impacts.

Service providers: Under the baseline option, Options 1 and 2, service providers

(especially for AV and premium sports content) would continue to be able to restrict

portability and many of them would continue to encounter problems (contractual

restrictions) when wanting to offer it, should right holders be reluctant to allow it. Option

47

1 would be somewhat more effective than the baseline because negotiations could result

in certain online service providers being able to offer portability. However the outcome

of the negotiations would depend on the market power of online service providers vis-à-

vis right holders and will require negotiations of multiple contracts, especially in the AV

sector. The effect of Option 2 would be similar; however it could be more beneficial to

service providers as in the negotiations they could argue that, due to the legal

mechanism, there is no need to carve out portability from the licences that cover the other

27 MS. Therefore, allowing portability in a licence can be, in principle, easier and less

costly than in Option 1. Option 3 would be more effective as service providers would be

able to systematically offer portability to their customers across Europe. Unlike other

options, Option 3 would include legislative safeguards ensuring the necessity and

proportionality of the requirements for authentication negotiated by right holders and

service providers. Therefore, Option 3 would be more efficient in terms of transaction

costs and implementation by service providers (see also efficiency below). In the music,

e-book and games sectors, Option 3 would mainly improve legal certainty for the current

and future dealings with right holders e.g. for music service providers that may be

providing portability without having this right clearly covered in the licensing contracts.

It would also ensure for the future that service providers in these sectors would continue

to be able to allow cross-border portability, despite possibly changing licensing practices

by right holders. The other options would have no impacts.

To summarise, from the perspective of consumers, industries and service providers,

Option 3 would be the most effective in meeting the objectives set out in Section 4.

Efficiency: The baseline option would not entail any compliance costs while Options 1

and 2 could generate administrative and technical costs (as explained below), for all

those right holders and service providers who decide to adapt their licensing practices

and terms of use in order to allow for portability of content. This would particularly

affect the AV and the sports sector. Options 1 and 2 would not impose cross-border

portability; therefore they would not generate costs directly. However it is likely that in

the absence of a legal mechanism that facilitates licensing for this specific purpose, the

negotiations under Option 1 would be more complex and costly than under Option 2.

Option 3 could generate some technical costs for all those service providers which do not

yet offer portability to their customers as it would not leave it for their decision to

provide for portability, like the other options. This could imply investing in technical

functionalities to verify the MS of residence and verify the temporary use of the service

as well as costs which are not directly triggered by Option 3 (and therefore not qualifying

as administrative costs) such as short-term costs, in case the parties want to review the

licensing agreements and possibly long-term costs related to the use of network

infrastructure. In any case, despite the short term and limited costs of providing for

portability, service providers would benefit from the more attractive service they can

provide to their consumers already in the medium term.

Cultural diversity: All options would have no or only very limited impact on cultural

diversity. None of these options would affect the production or distribution of culturally

diverse content or would directly extend the range of consumers having access to such

content. Option 3, and to a minor extent Options 1 and 2, would be beneficial in terms of

easier access to culturally diverse content as they would allow consumers to enjoy online

content in a more flexible way across the EU. Option 3 may also attract some new

consumers to use the online content services.

Fundamental rights: The baseline option, Option 1 and Option 2 would not have any

impact on fundamental rights. Option 3 would have a limited impact on copyright as

property right and on the freedom to conduct a business, as recognised in the European

Charter of Fundamental Rights (Articles 16 and 17). Option 3 and, to the extent right

48

holders and service providers choose to rely on the legal mechanism, Option 2 could

affect the consumers' right to the protection of personal data, should service providers

verify the temporary nature of the stay in another MS. However, the measure would be

justified in view of the Treaty's fundamental freedom to provide and receive services

across borders and data processing would have to comply with the provisions of

Directive 95/46/EC in all cases.

Third countries, trade and environment: None of the options would have any impact

on third countries and trade or on the environment. Neither do they affect the EU's and

the MS's international obligations.

Subsidiarity and proportionality: None of the options go beyond what is necessary to

solve the identified problems. Moreover, the initiative is limited to solving a problem of a

cross-border nature that cannot be achieved by the MS alone (see Section 3). Among the

examined options, the baseline option is not sufficient to achieve the objective of

ensuring cross-border portability of content online in the AV and sports sectors where

this problem is the most present. Option 1 could allow reaching this objective only

partially and would create uncertainty for service providers and for consumers travelling

in several MS as to the authorised uses. Option 2 might be slightly more effective by

putting a legal mechanism at the parties' disposal to facilitate the negotiations but

providing cross-border portability would remain optional. Consequently, the objective

would only be achieved under Option 3. The obligations foreseen under Option 3 as

regards the licensing agreements are necessary to make sure that the providers of online

content services (both subscription-based and transaction-based) offer cross-border

portability to their customers. They do not affect territorial licensing as such and

therefore have a limited effect on the current licensing practices and business models.

8. THEREFORE, THE PREFERRED OPTION IS OPTION 3. HOW WOULD THE ACTUAL

IMPACTS BE MONITORED AND EVALUATED?

The Commission will ensure that the action selected in this IA contribute to the

achievement of the set policy objectives. The preferred option should be able to respond

to the general and specific objectives in Section 4 as well as the following operational

objectives:

1. Increase the number of subscription-based and transaction-based online content

services that are portable across borders, 2. Increase the number of consumers using this

feature of the online content services.

The process of monitoring the impacts should consist of two phases:

Phase 1: The first phase will start right after the adoption of the legislative act and

continue until its start of application in 2017. It will focus on how the Regulation is put

in place in the MS by the market participants in order to ensure a consistent approach.

The Commission will organise meetings with MS representatives (e.g. group of experts)

and the relevant stakeholders in particular to see how to facilitate to transition to the new

rules.

Phase 2: The second phase would start from 2017 and would focus on direct effects of

the rules contained in the Regulation. It would also extend to the monitoring of the

amendment of the existing contractual arrangements which would need to take place

during a one-year transitional period. This monitoring will pay particular attention to the

impacts on SMEs and the extent to which existing contracts are renegotiated. The

Commission will continue to work with stakeholders to ensure effective implementation.

The table below presents the main output and impact indicators that will be used to

monitor progress towards meeting the above objectives, as well as the possible sources of

49

information. The data collection should start in 2017 so as to gather sufficient baseline

data that can serve as a basis for comparison and then followed up every second year

after the start of application of the Regulation. Econometric methods should be used (e.g.

by putting the portability offer trend in a regression with a dummy variable for when the

regulation starts to apply) so as to help (to some extent) to disentangle the effects of the

regulation from the natural progress in the market. Moreover, the collected data should

be compared (using difference-in-difference method) to data from countries (e.g.

Switzerland) that will not be subject to a regulation.

Indicators Source of information Frequency of

measurement

The following indicators could be used in

each sector (AV, music, e-books, games,

sport):

1. Increase in the number of

subscription-based online services

offering cross-border portability;

2. Increase in the number of

transaction-based services offering

cross-border portability;

3. Increase in the number of customers

using cross-border portability;

4. Average number of days of use

outside the MS of residence;

5. Evolution of the prices of

subscription-based and transactional

services offering cross-border

portability.

The Commission can obtain this

information from the following

sources:

- existing data sources, such as the IHS

database, European Audiovisual

Observatory;

- directly from online content service

providers or right holders (through

bilateral contacts or questionnaires).

In addition, the Commission could

obtain data from the following sources:

- specific studies to monitor the cross-

border portability of online services;

- ad-hoc surveys to monitor consumers'

behaviour (Eurobarometer).

Every second year.

A comprehensive evaluation will take place 5 years after the start of application of the

rules.

50

9. ANNEX 1 – PROCEDURAL INFORMATION

Consultation within the Commission

DG Connect has the lead of this file which is in the Commission Work Programme for

2015. The number of the entry in the Agenda Planning is 2015/CNECT/022.

The work on the IA started in December 2014. The first meeting of the Copyright Inter-

Service Steering Group ("ISSG"), chaired by the SG, took place on 25 March 2015. The

second and third meeting took place respectively on 13 May 2015 and 21 September

2015. In addition to DG CONNECT, DG COMP, EAC, ECFIN, EMPL, ENV, ESTAT,

GROW, JRC, JUST, RTD, SANTE and TRADE participated to the ISSG, together with

the LS and the EPSC.

Consultation of the RSB

The recommendations of the RSB Changes in the IA report

1) Clarify the 'need to act' on the identified

problem. The report should clarify under which

conditions the problem of the lack of portability of

online content could be solved and explain whether

these conditions are currently fulfilled or not. In

addition, more explanations should be provided as

to why the market will not be able to solve the

problem within a reasonable period of time, at a

reasonable cost and/or in a uniform way, given that

no evidence-based evaluation of the industry pledge

("Licences for Europe") from 2013 is presented in

the report.

The IA explains inter alia in the context, in the

problem definition and in the section on subsidiarity

the specificities of this issue and the relation

between this initiative and others considered in the

DSM Strategy. It also clarifies the reasons why the

market could only solve this problem in the AV and

sports sectors in the long term, if at all; although

even if it does so, the result is likely to be

inconsistent and deliver limited benefits for

consumers. It justifies why EU intervention is the

only way to effectively resolve the existing

problem. Moreover, the problem definition and the

assessment of Option 1 explain better why the

pledge at Licences for Europe is unlikely to deliver

consistent results.

2) Better justify the limited range of options and

scope of action. The report should better justify the

limited choice of options considered in the analysis

and give more reasoning behind discarding some of

the options which are preferred by stakeholders

(e.g. the introduction of the legal fiction without the

obligation to introduce portability into the offer).

For instance, it should give more explanation why it

was decided not to define the 'temporary stay' and

consider impacts of different definitions thereof in

view of possible inquiries during the legislative

process.

The IA report now contains a separate option

(Option 2) that assesses the impacts of solution that

would imply the introduction of the legal fiction

without the obligation to introduce portability into

the offer. It concludes that such a solution could not

solve effectively the identified problem.

The options in the IA also explain the relevance of

"temporary stay" in a MS as opposed to the MS of

habitual residence of the consumer.

3) Explain in more detail the characteristics of

the legal fiction. The report should be more

specific about how the legal fiction, removing the

legal obstacles for service providers to offer cross-

border portability of online content, will be

introduced in practice and what direct and indirect

impacts it will have on service providers, right

holders and consumers (the need to renegotiate the

contracts, the associated costs, the risks of abuse,

the duration of the temporary stay, etc.).

The new Option 2 describes the characteristics of

the legal fiction and provides for a self-standing

assessment of its direct and indirect impacts. Option

3 assesses the impacts of the legal fiction together

with those of the obligations on service providers to

ensure the cross-border portability of online content

services.

4) Strike a more sound balance in assessing

impacts of options. The report should elaborate on

the extent to which the proposal reaches a balance

between increased cross border portability of

legally acquired online content and the limitation of

The assessment and comparison of the options have

been reviewed to provide a more sound balance of

the impacts, including on fundamental rights.

The options and Annex 2 explain the targeted

stakeholder consultation and how the views of

51

fundamental rights for the consumers via increased

consumer surveillance by service providers linked

to the verification of the (undefined) temporary stay

outside the country of residence. Moreover, the

results of the targeted stakeholder consultations

(workshops) conducted specifically on the issue of

cross-border portability should be more explicitly

reflected in the report and justification should be

provided in case stakeholder views are discarded.

stakeholders have been taken into account.

Evidence used in the IA

Information and data needs mainly concern the situation in the different sectors of the

market, the views of stakeholders and the possible technical costs of adding the cross-

border portability feature to online content services.

The IA was prepared using diversified sources of information, including information

received from stakeholders, input from external experts, market reviews (available

publicly or through subscription), sources of statistics (including Eurostat) and surveys,

as well as publicly available information from service providers and holders of rights in

content (and their representatives).

The Commission carried out a public consultation and conducted a stakeholder dialogue

"Licences for Europe"141

, (see Annex 2). These exercises brought input from various

stakeholders, which was taken into account in the IA.

External expertise used in the IA process

A series of legal and economic studies were conducted on various aspects of the existing

copyright rules.142

One of these studies assesses the extent to which the implementation

of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related

rights in the information society is appropriate for the economic and technological

realities of digital markets143

. An economic study on the territoriality of the making

available right144

was also conducted. These studies, together with the consultations

mentioned above, constitute a solid basis for this IA.

Further studies have been conducted by DG JRC (IPTS) on the impacts of digitisation on

the production and distribution of content, as well as on the cross-border access to

content145

. DG EAC carried out a number of studies concerning sports, including the

Study on the Contribution of Sport to Economic Growth and Employment in the EU146

and the Study on sports organisers’ rights in the European Union147

.

141 See https://ec.europa.eu/licences-for-europe-dialogue/en/content/about-site 142 While no formalised evaluation of the copyright acquis has been carried out, many aspects have been

evaluated in the framework of the Commission Green Papers, consultations and the “Licences for

Europe” stakeholder dialogue, alongside with the input from the studies. . 143 "Study on the application of Directive 2001/29/EC on copyright and related rights in the information

society", De Wolf and partners, December 2013.

http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf 144 Study on the "Economic analysis of the territoriality of the making available right", CRA, March 2014,

http://ec.europa.eu/internal_market/copyright/docs/studies/1403_study1_en.pdf 145 http://is.jrc.ec.europa.eu/pages/ISG/DigEcocopyrights.html 146

http://ec.europa.eu/sport/library/studies/study-contribution-spors-economic-growth-final-rpt.pdf 147

http://ec.europa.eu/sport/news/2014/docs/study-sor2014-final-report-gc-compatible_en.pdf

52

10. ANNEX 2 – STAKEHOLDER CONSULTATION

The Commission held a series of consultations that are of relevance for the present

impact assessment, e.g. the Green Papers on the online distribution of audiovisual works

in the EU148

and on "preparing for a Fully Converged Audiovisual World: Growth,

Creation and Value".149

A wide-ranging public consultation on the review of EU

copyright rules150

, covering, inter alia, the area discussed in this IA, was conducted in

2013-2014. The public consultations were complemented by a stakeholder dialogue -

"Licences for Europe".

The Commission's minimum standards with respect to the stakeholder consultation have

been met. The following paragraphs describe in more detail the public consultation on

the review of EU copyright rules as well as the "Licences for Europe" process together

with their results.

Public consultation on the review of EU copyright rules

The public consultation on the review of EU copyright rules was conducted from 5

December 2013 to 5 March 2014. All citizens and organisations from across sectors were

welcome to contribute to the consultation. Contributions were particularly sought from

consumers, institutional users (e.g. a library, a university), authors, performers,

publishers, producers, broadcasters, intermediaries, distributors and other service

providers, collective management organisations, public authorities and Member States.

The consultation document explained the context of the consultation in order to facilitate

responses by interested parties. Each specific section of the consultation document

provided an introduction to the relevant subject in order to make it easier for respondents

to understand the issue and be able to respond adequately. Over 9,500 replies (published

on the Commission website) were received from a broad range of stakeholders.151

There

were also a total of more than 11000 messages, including questions and comments, sent

to the Commission’s dedicated email address. A report summarising the responses to the

public consultation was published in July 2014.152

While not exhaustive, the results of the consultation that are of relevance for the impact

assessment are provided by stakeholder category (see below for an exhaustive summary

of replies by stakeholders):

• Some end users argued that, apart from facing problems when trying to access online

services in another EU country, they had difficulties or could not access their national

services or products they have bought online when travelling or living abroad. This

was due to digital rights management systems and technological protection measures

used by service providers to enforce territorial restrictions.

• Institutional users indicated that market-led solutions have not proven to be effective

with respect to problems with cross-border provision of copyright protected content

and that harmonisation measures are necessary to improve cross-border availability of

cultural content.

• Authors and performers generally consider that there are multi-territorial licences

available (at least in the book, image and music sectors) and that services providers'

commercial decisions determine the rolling-out of digital content.

148

COM(2011) 427,available at: http://ec.europa.eu/internal_market/copyright/initiatives/audiovisual/index_en.htm 149

http://ec.europa.eu/digital-agenda/en/consultations-media-issues 150

http://ec.europa.eu/internal_market/copyright/initiatives/index_en.htm 151 http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/index_en.htm 152 http://ec.europa.eu/internal_market/consultations/2013/copyright-

rules/docs/contributions/consultation-report_en.pdf

53

• For record producers, there is a wide offer of online music in Europe and music

services are portable across borders. Broadcasters' views are split on whether further

measures are needed at EU level in the area of territoriality. Film producers generally

consider that the current EU copyright rules should not be changed and some of them

also consider that territorial restrictions in licences are needed. Publishers generally

consider that territoriality is not a factor in their business, given that authors usually

provide them with a worldwide licence.

• Numerous service providers raise the issue of cross-border portability of services and

would favour licences that allow them to continue to serve their customers.

To summarise the views of the affected stakeholders, it can be said that: consumers are

generally in favour of improving cross-border access to online content, including the

cross-border portability of online services; the content industry, representatives of right

holders, service providers, etc. are not against cross-border portability of online services

but are usually in favour of industry-led solutions and soft law instruments as opposed to

legal obligations in this area.

"Licences for Europe" initiative

Turning now to the "Licences for Europe" initiative, this structured stakeholder dialogue

gathered stakeholders in four Working Groups and went on until November 2013.

Working Group 1 was called "Cross-border access and portability of services" and

addressed, amongst others, the specific issue of cross-border portability, i.e. the ability of

consumers having subscribed to online services in their Member State to keep accessing

them when travelling temporarily to other Member States. The Group had 3 sub-groups -

"Audiovisual", "Print" and "Music" - and comprised stakeholders representing different

content sectors and parts of the value chains, notably consumers, right holders, service

providers and ICT providers. The Group held 9 meetings throughout 2013. As a result,

representatives of the audio-visual sector issued a joint statement affirming their

commitment to continue working towards the further development of cross-border

portability:

Cross-border portability of subscription services: joint statement by the audio-

visual industry153

Today, subscribers to audio-visual services online, e.g. consumers watching movies via

an Internet service provider or web-store, are often denied access to services legally

bought in their own EU country when they cross national borders.

This will change:

Representatives of the audio-visual sector have issued a statement affirming their

willingness to continue to work towards the further development of cross-border portability.

Consumers will increasingly be able to watch films, TV programmes and other audio-visual

content for which they have subscribed to at home, when travelling in the EU on business or

holidays. This is already largely the case with music, e-books, magazines and newspapers.

[Signatories: Association of Commercial Television (ACT), European Coordination of

Independent producers (CEPI), Europa Distribution, EUROVOD, Federation of

European Film Directors (FERA), International Federation of Film Distributors

Associations (FIAD), International Federation of Film Producers Associations (FIAPF),

153 For more details, see the document “Licences for Europe – ten pledges to bring more content online”:

http://ec.europa.eu/internal_market/copyright/docs/licences-for-europe/131113_ten-pledges_en.pdf

54

Independent Film & Television Alliance (IFTA), International Video Federation (IVF),

Motion Picture Association (MPA), Sports Rights Owners Coalition (SROC), Society of

Audiovisual Authors (SAA)]

Three stakeholder workshops in 2015

In January 2015, Commissioner Oettinger held a stakeholder roundtable "Territoriality:

Exploring Consumer and Business Opportunities in a Digital Single Market". One of the

objectives of the roundtable was to discuss cross-border portability of online content

services. Representatives of consumers, right holders and service providers in the

different content sectors participated. Most of the participants referred explicitly to the

need to ensure portability or, respectively, signaled openness to work towards portability.

In May 2015, Commissioner Oettinger invited key stakeholders in the audiovisual sector

to discuss "how to ensure the portability of legally acquired content and cross-border

access to legally purchased online services, while respecting the value of rights in the

audiovisual sector and making sure that copyright remains a driver for creativity and

investment". Representatives of film directors, producers and distributors, broadcasters,

online platforms as well as film financing providers participated. Several participants

signaled openness to work towards portability.

In October 2015, DG Connect convened a dedicated stakeholder workshop on cross-

border portability of online content services. The main objective of the workshop was to

discuss and test different options for achieving portability. Stakeholders representing

different content sectors and parts of the value chains, notably consumers, right holders,

service providers and ICT providers, participated. The participants (i) appreciated the

focus on portability and differentiation from cross-border access to content; (ii) were

interested to find out more and made points about the main features and likely impacts of

possible legislative instrument: scope, extent of obligations, possible costs, safeguards,

application to existing contracts. While some participants (representing consumers, ICT

sector) expressed full support for the possible legislation on cross-border portability,

some other participants (representing the film sector, broadcasters) were in favour of

facilitating rather than mandating it.

Extract from the Report on the responses to the Public Consultation on the Review

of the EU Copyright Rules154

Cross-border access to online content (Questions 1 to 7)

1. [In particular if you are an end user/consumer:] Have you faced problems when trying to access online

services in an EU Member State other than the one in which you live?

2. [In particular if you are a service provider:] Have you faced problems when seeking to provide online

services across borders in the EU?

3. [In particular if you are a right holder or a collective management organisation:] How often are you

asked to grant multi-territorial licences? Please indicate, if possible, the number of requests per year and

provide examples indicating the Member State, the sector and the type of content concerned.

4. If you have identified problems in the answers to any of the questions above – what would be the best

way to tackle them?

5. [In particular if you are a right holder or a collective management organisation:] Are there reasons

why, even in cases where you hold all the necessary rights for all the territories in question, you would still

154 This Annex contains the summary of responses on issues addressed in this IA. The complete report is

available at http://ec.europa.eu/internal_market/copyright/initiatives/index_en.htm

55

find it necessary or justified to impose territorial restrictions on a service provider (in order, for instance,

to ensure that access to certain content is not possible in certain European countries)?

6. [In particular if you are e.g. a broadcaster or a service provider:] Are there reasons why, even in cases

where you have acquired all the necessary rights for all the territories in question, you would still find it

necessary or justified to impose territorial restrictions on the service recipient (in order for instance, to

redirect the consumer to a different website than the one he is trying to access)?

7. Do you think that further measures (legislative or non-legislative, including market-led solutions) are

needed at EU level to increase the cross-border availability of content services in the Single Market, while

ensuring an adequate level of protection for right holders?

Respondents were asked whether they had faced problems when trying to access/seeking to provide online

services across borders, and to share their experiences/views as regards multi-territorial licensing and

territorial restrictions. Views were also sought on whether further measures (legislative or non-legislative,

including market-led solutions) beyond recent initiatives such as the Collective Rights Management

Directive155 and the Licences for Europe dialogue would need to be taken at EU level to increase the cross-

border availability of content services in the single market, while ensuring an adequate level of protection

for right holders.

End users/consumers

The vast majority of end user/consumer respondents report facing problems when trying to access online

services in another EU country. They state that they are regularly confronted with access restrictions

depending on the geographic location of their IP address.

Concrete examples were given. Many report seeking to view a video online via YouTube, but being

blocked by a national collective management organisation for copyrighted content. Others signal the lack

of access to popular video on demand services such as Netflix and the BBC iPlayer, which are currently

only available to the residents of some EU Member States. Music services such as iTunes and Spotify are

also criticised for either not being accessible in certain countries or only featuring a limited online

catalogue compared to the one they offer in other countries. More generally, consumer report being

frequently confronted with messages indicating that a given item of content/service is not available in their

country. The experience is all the more frustrating, some say, when it happens to people seeking to view or

listen to content from their home country when in another EU country.

For some services, consumers/end users report being redirected to a national website when trying to access

the same service in a website with a different geographical location. Consumers argue that this negatively

impacts their freedom of choice, by being forcefully limited to a national selection of content while

different or more extensive content is available to residents of other EU countries.

Respondents highlight that the redirection to national online stores and the consequential separation of

markets along national borders often leads to price discrimination and different conditions for identical

products and services depending on the Member State. Some note that when, for example, wanting to buy a

video game online, the price for this product may be higher on their national web shop version than on web

shops in other EU countries.

Some respondents also report that digital rights management systems and technological protection

measures used by service providers to enforce territorial restrictions make it difficult or even impossible to

access their own national services or products they have bought online when travelling or living abroad.

In general, end users/consumers would like to be able to access all content from any online stores whether

directed to the Member State in which they reside or not. At the minimum, many consumers say, there

should be transparency as to the possibilities of accessing content cross-border and on territorial

restrictions. They consider the blocking of content to be mostly arbitrary and unpredictable.

Some end users/consumers call for a ‘common copyright’ in Europe (sometimes indicating the ‘Wittem’

Project - www.copyrightcode.eu - as an example). These users believe that a single copyright title would

do away with territorial restrictions and allow for content to be freely accessed, purchased and transferred

across the entire EU market.

Institutional users

Libraries report that it is very difficult to negotiate licences and manage subscriptions for multiple Member

States. Universities point to problems that students face in accessing online educational resources when

155 Directive 2014/26/EU on collective management of copyright and related rights and multi-territorial

licensing of rights in musical works for online use in the internal market.

56

they are not resident in the country of the university (e.g. students of online courses). Some institutional

users also note problems with access to cultural content by users from the same language group residing in

different EU countries.

Institutional users generally consider that territoriality of copyright creates problems in particular in the

area of exceptions, where a higher level of harmonisation is needed.

Some institutional users acknowledge that problems with cross-border provision of copyright protected

content stem not only from the fact that copyright is territorial but also from technological, regulatory and

taxation differences between EU Member States. Many respondents consider that market-led solutions

have not proven to be effective and that harmonisation measures, also in areas going beyond copyright, are

necessary to improve cross-border availability of cultural content. Some libraries and universities also

point to problems with the identification of rights and rightholders and call for more transparency on these

issues and for simplified licensing mechanisms.

The great majority of respondents in this category consider that further measures are needed to increase the

cross-border availability of services in the single market.

Authors/performers

Authors and performers generally consider that the deficit of cross-border accessibility of content does not

result from the fact that copyright is territorial or from problems in licensing. They highlight that multi-

territorial licences are available (at least in the book, image and music sectors) and that service providers’

commercial decisions determine how, when and where services distributing digital content are rolled out.

Very often, authors and performers argue, there is no demand for cross-border services and therefore no

business case for service providers. Cultural, language and regulatory differences between Member States

are cited as among the reasons for territory-based services. For example, according to authors and

performers, providers of audio-visual services prefer to roll out services on a territorial basis due to the

required contextualisation and versioning. They also highlight that in the audio-visual sector territorial roll-

out with exclusive distributors per territory is a tool for rightholders to secure adequate financing at the

pre-production stage.

According to some authors, the only licensing-related problems in the music sector are due to the

fragmentation of the Anglo-American repertoire between collective management organisations and

publishers. They believe that the problems with licensing in the music sector should be alleviated by the

newly adopted Collective Rights Management Directive and market-let solutions such as the Global

Repertoire Database.

As regards the way forward, the vast majority of authors and performers consider that further measures to

increase the cross-border availability of content are needed. However, many respondents consider that

these measures should be taken in areas such as consumer protection, payment measures and VAT and not

in the area of copyright.

Publishers/producers/broadcasters

Record producers state that they grant EU-wide cross-border licences and in some cases also worldwide

licences. They emphasise the wide offer of online music in Europe and the fact that music services are

portable across borders. In their view there is no clear evidence that problems with cross-border access

exist in the music sector, including any unsatisfied consumer demand for cross-border access. Record

producers point to the fact that many digital platforms elect to roll out services on a gradual country by

country basis, for commercial reasons, and to adapt their services to consumers’ needs and tastes in each

country. They state that many non-copyright factors are also involved in the development of services

across borders, and require considerable investment, such as negotiating deals with local operators,

including internet service providers (ISPs), mobile networks, advertisers, and payment providers. Music

publishers generally consider that the territoriality of copyright does not cause them problems as they

commonly grant multi-territorial licences. However, in some cases service providers prefer to be licensed

on a territory-by-territory basis because their services are intended for only one or a few territories. Music

publishers generally answer that they do not impose any territorial restrictions on their licensees and that

when limitations exist, they are a result of the service providers’ choice.

The vast majority of record producers and music publishers do not think that measures are needed at EU

level to increase the cross-border availability of content. They point to the fact that the market is delivering

with multiple services and millions of songs available to European citizens

A large part of broadcasters state that there is often no incentive to provide services in several Member

States because of various considerations including viewing habits of consumers, consumer demand,

language, ability to provide consumer support in more than one language, cost of marketing, etc. The

majority of broadcasters see a need to restrict rights on a territorial basis and to guarantee full exclusivity to

57

distributors who are pre-financing productions to enable them to make return on their investment. They

also emphasise the role this form of financing plays in maintaining cultural and linguistic diversity. Some

broadcasters say that the market is naturally moving towards addressing demand for cross-border delivery

of content where it is economically significant. Many commercial broadcasters emphasise that there are no

legal obstacles to the trade in audio-visual productions on a multi-territorial basis. Some broadcasters

report having problems in acquiring multi-territorial licences for music.

Broadcasters’ views are split on whether further measures are needed at EU level in the area of

territoriality: some broadcasters (mostly commercial) do not see any need for legislative change, while

others, in particular public service broadcasters, see a need for some legislative changes. In particular,

many public service broadcasters call for the application of the country of origin approach to online media

services (as a minimum to broadcast-related online services). They also call for the system currently

applicable to cable retransmission under the Satellite and Cable Directive 156 to be applied also to

simultaneous retransmission of broadcasts via online platforms. Moreover, public service broadcasters

emphasise the need of finding effective rights management solutions for on-demand services which are

related to linear programmes (e.g. catch-up TV) and which can be offered by the broadcaster itself or by

third parties. They suggest that the system of extended collective licensing of the underlying rights to

works and other subject matter used in broadcast programmes could be a solution. Finally, public service

broadcasters call for the extension of the broadcasters' neighbouring right to protect their signals on

whatever platform against unauthorised alteration or other use by third parties A minority of broadcasters

state that there is a general need to improve the licensing schemes in Europe and to encourage one stop

licensing

Film producers in general point out that service providers mostly cater to national or specific linguistic

audiences and therefore are not interested in multi-territorial licences except for territories in which the

same language is spoken. Multi-territorial distribution can be very costly as it involves targeted local

advertising campaigns, employing multilingual staff for customer services, the use of different delivery

networks, operating in territories with varying internet costs, broadband penetration and VAT rates, etc.

Further harmonisation in those fields could reduce costs and incentivise licensing on a broader territorial

scope. Some film producers say that territorial restrictions in licences are needed as without them

distributors that pre-finance productions would not have the capacity to finance new films. Film producers

generally consider that the current EU copyright rules should not be changed.

In the print sector, book publishers generally consider that territoriality is not a factor in their business, as

authors normally provide a worldwide exclusive licence to the publishers for a certain language. Book

publishers state that only in the very nascent eBooks markets some licences are being territorially

restricted. Book publishers also generally do not see a need for changes to the EU copyright rules.

Newspaper and magazine publishers in general take the same view. They believe that when territorial

restrictions exist, they are the consequence of commercial choices. This stakeholder group points to

projects such as the Press Database and Licensing Network, as examples of how rightholders can manage

cross-border and multi-territorial licensing.

Collective Management Organisations (CMOs)

CMOs state that they are generally willing to grant and do grant multi-territorial licences. However,

demand by service providers for multi-territorial licences varies across sectors and it is especially limited

in the audio-visual sector. CMOs active in the audio-visual sector consider that a framework to remunerate

audio-visual authors should be established, failing which, they say, it impossible for them to offer multi-

territorial licences. Moreover, demand for multi-territorial licences depends largely on the repertoire the

CMO holds. In the music sector the more popular repertoires are often licensed on a multi-territorial basis.

Multi-territorial licences are also often demanded in the fine arts and artistic photography sector.

CMOs mention that in some cases licences are territorially limited as a result of right holders granting them

territorially limited mandates. CMOs in the audio-visual sector state that in some instances, territorial

limitations in granting licences are a necessary consequence of the exclusive territorial distribution of

audio-visual works. Some CMOs argue that imposing multi-territorial licensing could endanger services

that cater for the specificities of local customers. They also find that the demand for multi-territorial access

to copyright protected content is not that strong yet and that digital distribution in this area is still a distant

second to distribution of physical goods.

156 Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright

applicable to satellite broadcasting and cable retransmission.

58

In general, the great majority of CMOs do not see any need to intervene on copyright although many see

the need for action in other areas, such as taxation. CMOs in the music sector consider that the results of

the Collective Rights Management Directive should be awaited before considering taking further steps.

Intermediaries/distributors/other service providers

Service providers distributing digital content point to the lack of information on content (such as who

represents particular rights and for which territories) as a major problem for the clearance of rights and

licensing in the single market. Fragmentation of repertoire in the music sector, the need to contract with

multiple licensors and the inefficiency of CMOs are also quoted as obstacles to launching services. Some

service providers (e.g. video on demand –‘VOD’- platforms) indicate that they are contractually required to

prevent cross-border access to their content as a result of territorial licensing. This means that VOD

operators can only make the content available in a given country and have to put in place digital rights

management measures (geo-blocking of foreign IP addresses) which prevent cross-border access and

portability of services.

Service providers also refer to a number of non-copyright related factors that are taken into account when

deciding on the potential multi-territorial roll out of services, including the cost of compliance with

divergent consumer protection laws; national rating systems; protection of minors obligations; taxation;

release windows; private copying regulations; the cost of contextualisation (i.e. market-specific marketing)

and versioning (subtitling and dubbing); the cost of providing customer care and responding to customer

complaints in several languages; no common technical standards for content delivery; the risk of fraud and

non-payments and the diverse economic realities which make a single price impossible; lack of digital

infrastructure/access to high speed broadband; and difficulties in payment processing; divergent advertiser

preferences..

Finally, providers of audio-visual services point to insufficient demand for cross-border services. Such

demand is limited to areas with common language and to migrant populations.

The vast majority of service providers believe that further measures are needed to increase cross-border

availability of content. Service providers call for the simplification of the licensing process in the single

market. Some emphasise the need to develop right information initiatives such as the Global Repertoire

Database and to enhance the transparency of who owns the repertoire. Other call for one-stop-shop

licensing based on the country of origin principle and for imposing obligations to license on CMOs.

Numerous service providers raise the issue of cross-border portability of services – they argue that licences

should allow them to continue serving customers who have paid for the content when they travel within the

EU. Some also call for a harmonised VAT on online services and content.

Member States

Those Member States who responded to the public consultation consider that there is no major problem of

lack of cross-border access to content online, whilst recognising that this is an important issue to discuss.

Some Member States are open to consider new legislation if needed but the general message is that no

urgent action is necessary. The market is dynamic and new solutions are emerging spontaneously. Some

Member States mention the Licences for Europe dialogue and stress the importance to foster market-based

solutions (for example on content portability) to improve cross-border availability of content and more in

general to enhance legal offers. Sectors are not all the same and specificities of each of them need to be

taken into account.. The need to preserve cultural diversity and consumer preferences is also highlighted.

Member States consider that the market, the implementation of the Collective Rights Management

Directive (and more in general the role played by Collective Management Organisations) as well as the

case-law of the Court of Justice should help improve the cross-border availability of content.

Other

Academics are divided on the issue of cross-border availability of copyright protected content with some

claiming that problems are limited to situations where rights are in different hands and others making more

general statements on problems related to multi-territorial licensing.

The latter group believes that problems in licensing are limited to the music sector and points to the

Collective Rights Management Directive as the potential solution, and argues that its effects over time

must be assessed before any other potential steps are taken. They emphasise that rightholders should be

able to license for certain territories only, for instance to avoid territories with a high level of infringements

and a low level of enforcement.

59

11. ANNEX 3 – WHO IS EFFECTED BY THE INITIATIVE AND HOW

This annex sets out the practical implications of the initiative for affected stakeholders,

namely content service providers and holders of rights in content. Consumers are key

stakeholders and the main beneficiaries of this initiative; however they would not have

obligations to comply with or costs to bear under the new rules.

The annex is prepared on the basis of the preferred policy option (i.e. Option 3, see

Sections 4-6). First, this annex indicates the key obligations which would have to be

fulfilled. Second, it describes the actions that the affected stakeholders might need to take

in order to comply with these obligations. And, third, it gives an overview of possible

costs linked to these obligations.

Key obligations

As the outcome of Option 3, no separate licence would be needed by a service provider

to cover a temporary use for the purposes of cross-border portability of the content in the

EU157

. In order to ensure the effectiveness of this measure, the following key obligations

would be imposed:

On right holders and service providers:

• A prohibition of restrictions in contracts between holders of rights in content and

the service providers which would limit the cross-border portability of services.

On service providers:

• Service providers would have to offer the portability feature to consumers and

provide them with access, during temporary stay in other MS, to the same content,

on the same range of devices and the same range of functionalities as those

offered in consumers' MS of residence. However, as service providers do not

control delivery networks, they should not be liable for any deficiencies in the

quality of the services delivered in a MS other than the MS of residence.

• The measure would not require service providers to use authentication tools in

order to check that the online content service is being accessed by authorised

users. This matter would be left to negotiations between right holders and service

providers. The measure would include appropriate safeguards to ensure that the

potential requirements regarding authentication tools imposed by holders of rights

would not go beyond what is necessary and proportionate for the objective of

authentication.

The proposed intervention would set out a reasonable time in order to allow the affected

stakeholders to comply with the above obligations.

Actions to be taken to comply with the key obligations

Actions directly linked to the key obligations

• Service providers may be required by right holders to use authentication tools in

order to check that the online content service is being accessed by authorised

users. If this is the case, service providers would need to introduce such tools, if

they are not yet available. Vast majority (if not all) of affected service providers

already has authentication mechanisms in place and could maintain them (see

157 This should include a legal fiction according to which the delivery of the service to a consumer

temporarily present in a MS other than his MS of residence would be deemed to occur in the MS of

consumer's residence (as opposed to in the MS of temporary sojourn of consumer). This Option will

not, as such, limit a possibility to grant licences for online content services on a territorial basis.

60

Section 5 of this IA). The preferred option could also imply the need to carry out

periodic checks on user logs based on IP address.

Actions which may be taken as an indirect consequence of the intervention

• Even though not required by the measure, right holders and service providers

could decide to renegotiate their contracts to e.g. amend provisions on the use of

authentication tools.

• In certain cases (especially with regard to AV and premium sports content),

online service providers would need to review the terms of use of their services.

As the change would be for the benefit of consumers (assuming no change to the

price of subscription), it could be easily introduced and the only related cost

would be the administrative cost of notifying the affected consumers (which is

normally done by email or on the website itself).

• The preferred option would not set legal requirements with regard to the quality

of the service delivered in the MS other than the MS of residence of the

consumer. Service providers would not be obliged to adapt the technical

infrastructure in order to ensure the same quality of service across borders.

However, they could do so if they decide to do this voluntary or commit to it in

contracts with right holders.

Potential costs to be incurred

Potential costs related to the offering of cross-border portability of online content

services can be divided into:

Costs directly linked to the intervention

• Service providers' costs of authentication of subscribers: the cost of implementing

such authentication tools would only relate to the limited cases of providers that

do not have such mechanisms in place and would be obliged to introduce them (or

would take such a decision voluntarily). The periodic checks on the user logs

based on the IP address that the service provider may undertake in view of

detecting abuses should not imply an additional cost.

Costs which may indirectly arise due to the intervention

• Costs of renegotiation of contracts between holders of rights and service providers

(renegotiation is not necessary under the preferred option).

• Service providers' costs related to the use of network infrastructure: while the

measure would not oblige service providers to do additional investment, they may

see a need (e.g. due to reputational considerations) to adapt the technical

infrastructure in order to ensure the same quality of service across borders or

commit to it in contracts with right holders.

The detailed analysis of the costs is provided in Section 5 of this IA.

61

12. ANNEX 4 – COPYRIGHT, SPORTS RIGHTS AND THE CONTENT INDUSTRIES IN THE EU

ECONOMY

Copyright and the provision of online content services

Copyright is a property right158

that rewards creativity (of composers, writers, film

directors, musicians, actors, etc.) and investment in creativity (by book and newspaper

publishers, film and record producers, broadcasters etc.) by granting rights159

over the

use of works (e.g. a novel, a film) and other protected subject-matter (e.g. records,

broadcasts). This area is harmonised by EU law to a great extent (see Annex 6 for

details).

These rights and their effective enforcement promote the formation of markets for

creative content by providing the framework within which right holders can negotiate

licensing agreements with users authorising the use of their work and can obtain

remuneration for such use. Providers of online services wanting to use copyright-

protected content need to get a licence from the holders of the rights in the content they

want to use and for the territories in which they want to provide the services.

The method of licensing of online rights depends on the type of content and the category

of right holder (e.g. rights in audiovisual content are normally licensed by AV producers

and, as far as premium AV content160

is concerned, on an exclusive territorial basis

whereas rights in music are licensed in part by record producers and music publishers

and in part by collective management organisations (CMOs) representing authors of

musical works and normally without territorial exclusivity).

Copyright content industries

According to a Report by the Office for Harmonization in the Internal Market and the

European Patent Office161

33 sectors of the EU economy are considered to be copyright-

intensive. They account directly for 3.2% of employment in the EU with around 7.05

million jobs (on average in 2008-2010).162

Overall, 4.2% of the EU’s GDP is generated

in copyright-intensive sectors (on average in 2008-2010).163

Copyright-intensive

industries account for 4.2% of EU’s exports, with net exports of around €15 billion in

2010.

On top of being essential drivers for cultural diversity in Europe,164

copyright-intensive

industries are one of Europe's most dynamic economic sectors. More than 1 million

companies are involved in motion picture, video and television programs production,

sound recording and music publishing activities, providing over 400,000 jobs, with net

158 Article 17(2), Charter of Fundamental Rights of the European Union; 159 For example, right of reproduction, right of communication to the public, right of distribution. Many

of these rights are harmonised in the directives mentioned in Annex 6. 160 Content which is most attractive in commercial terms, e.g. new films and series. 161 “Intellectual property rights intensive industries: contribution to economic performance and

employment in the European Union. Industry-Level Analysis Report”. A joint project between the

European Patent Office and the Office for Harmonization in the Internal Market, September 2013. 162 Using an adapted version of the methodology developed by the World Intellectual Property

Organization (WIPO) in the WIPO guidelines, industries are grouped into four categories according to

the degree to which their activity depends on copyright: core copyright industries, inter-dependent

industries, partial copyright industries and non-dedicated support industries. The report, however, is

based on a stricter approach to the definition of core copyright-intensive industries and does not cover

inter-dependent, partial or non-dedicated support industries. 163 Applying the original WIPO methodology, the report would arrive at 6,7% contribution to the

employment and 7,8% contribution to GDP of copyright-intensive industries in the EU. 164 Communication of the European Commission 'Promoting cultural and creative sectors for growth and

jobs in the EU' 26 September 2012.

62

contribution to the EU economy of over €13 billion,165

with the audiovisual sector worth

nearly €132 billion in 2011, and online video on demand (VoD) €616 million (having

grown by 45% compared to 2010).166

The European game market is valued at €14,5

billion.167

The creative industries in the EU are dominated by micro firms with 95%

having fewer than 10 employees coexisting with very large corporations.168

The

overwhelming majority (90.8 %) of the value added generated within the EU-27’s film

and sound recording activities sector in 2010 was provided by SMEs,169

which employ

just over three quarters (75.4 %) of the total number of persons employed in the sector. In

the recorded music industry, 99% of music business are SMEs while 80% of the music

released today is produced by SMEs independent music companies,170

and one of the

three major labels is European. Europe is particularly competitive in the publishing

industry (books and newspapers). According to the Global Ranking of World Publishing

released in July 2013, 7 of the top 10 book publishing companies are European,171

and

large enterprises (employing 250 or more persons) generated almost half (49.3 %) of the

EU-27’s value added in 2010. Nevertheless, the average publishing industry employs 5.4

employees and less than 1% of the publishing companies have 250 employees.172

Sport rights and selling broadcasting rights into sporting events

In 2011-2012, the share of sport-related gross value added of total EU gross value added

was 1.76%.173

Sport activities significantly contribute to jobs in the EU: the share of

sport-related employment in the total employment is 2.12%.174

Under EU law, sporting events as such are not protected by copyright (as clarified by the

Court of Justice of the European Union (CJEU)175

or other intellectual property rights.

Nevertheless, it is permissible for a MS to protect sporting events by putting in place

specific national legislation, or by recognising, in compliance with EU law, protection

conferred upon those events by agreements concluded between the persons having the

right to make the AV content of the events available to the public and the persons who

wish to broadcast that content to the public of their choice.176

As for broadcasts of

sporting events (as opposed to sporting events as such), broadcasting organisations can

invoke rights in the transmissions accorded to them under EU copyright law.177

Joint selling is one of the standard ways of marketing broadcasting rights for sporting

events. Sports clubs entrust national or international sports associations to sell

broadcasting rights on their behalf. For example, rights to broadcast European football

165 Source : Eurostat, 2013 166 European Audiovisual Observatory 2012 Yearbook Volume 2 Television, cinema, video and on-

demand audiovisual services – the pan-European picture 167 PwC Global Entertainment and Media Outlook 2012-2016 168 European Competitiveness Report 2010, p. 15 169 Enterprises employing fewer than 250 persons. 170 Independent music companies Association (IMPALA) comments on the EC consultation on a future

trade policy, July 2010. 171 See "the World's 60 Largest Book Publishers, 2013", http://www.publishersweekly.com/pw/by-

topic/industry-news/financial-reporting/article/58211-the-global-60-the-world-s-largest-book-

publishers-2013.html 172 Source: Eurostat 173 See Study on the Contribution of Sport to Economic Growth and Employment in the EU, November

2012, commissioned by the European Commission, Directorate-General Education and Culture, page

2. This figure is based on the "broad definition" of sport, covering all activities which are inputs for

sport and activities which require sport as an input, i.e. related to a sport activity. 174 Ibid, page 3. 175 See Joined Cases C403/08 and C429/08, Football Association Premier League Ltd, v QC Leisure, (C-

403/08); Karen Murphy v Media Protection Services Ltd (C-429/08), para 98. 176 Ibid, para 102 177 Ibid, para 150

63

leagues matches are mainly sold collectively by the respective associations. Cyprus and

Portugal are the last EU markets where first division football clubs sell their rights

individually.178

The International Olympics Committee (IOC) is the owner of the global

broadcast rights for the Olympic Games.179

Sport broadcasting rights may also be sold

individually by sports organisers.

In the light of Commission's decisional practice in competition cases180

, in a number of

EU markets premium sport content broadcasting rights are sold in open tenders and in

packages181

. In its decisions, the Commission required the creation of two or more

independently valid packages for the most important rights, in particular the exclusive

rights to broadcast live sport events. Also, rights not sold by the sport association within

a certain time period would fall back to the individual clubs for parallel exploitation.182

However, such selling practices are not yet spread in all EU markets: there are markets

where rights are sold in one exclusive bundle without tendering proceedings.183

On the

other hand, the AVMS Directive established a possibility for MS to ensure that certain

sporting events of "major importance for society" would be shown on free TV.184

Presently, premium sports content is routinely marketed on an exclusive territorial

basis.185

To ensure such exclusivity, the licensee is required to eliminate the possibility of

viewing its transmission outside the licensed (usually national) territory. However, this is

not always the case, as sports broadcasting rights may also be sold on multi-territorial

basis. E.g., the broadcast rights for the four Olympic Games in 2018-2024 were sold to

Eurosport/Discovery for the entire Europe (in France and the United Kingdom, only for

2022-2024, as the rights were already sold for 2018-2020).186

Other (not premium) sports

content may be licensed without geographic restrictions. Moreover, there are experiments

with exploiting such rights through own website or other online platforms, including

without geographic restrictions, as well as mixed solutions, where in certain territories

rights are sold to broadcasters/service providers, while in other countries (where sports

organisers could not sell its rights) live sporting events are streamed for free.187

Thus the

178 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014, page 70. In Spain, the rights for the football league were sold collectively in July 2015, while

previously they were sold on an individual basis by the clubs (for the season 2015/16, the broadcasting

rights were sold to Telefónica, while a public tender is expected for the three upcoming seasons, see

http://www.laliga.es/en/news/nota-informativa-28). 179 See http://www.olympic.org/olympic-broadcasting 180 See cases COMP 37.398 (UEFA Champions League, 2003), COMP /37.214 (German Bundesliga,

2005), COMP/38.137 (FA Premier League, 2006). 181 In the FA Premier League case (COMP/38.137), the Commission also imposed on the collective

selling entity a no single buyer obligation, to avoid that all broadcasting rights are consolidated by one

buyer. 182 Ibid. 183 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014, p 94. 184 Article 14(1) of the Directive provides that each Member State may take measures in accordance with

Union law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis

events which are regarded by that Member State as being of major importance for society in such a

way as to deprive a substantial proportion of the public in that Member State of the possibility of

following such events by live coverage or deferred coverage on free television. 185 Licencing in various territories may generate different level of revenues, in particular for national

league matches. For example, in the 2011-2012 season, the top five European football leagues

received the great majority of the revenue from the sale of media rights is generated in the domestic

market (see ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report,

February 2014, p 67). 186 See http://www.olympic.org/news/ioc-awards-all-tv-and-multiplatform-broadcast-rights-in-europe-to-

discovery-and-eurosport-for-2018-2024-olympic-games/246462 187 Examples include free streaming of various sports at the Sports Hub Channel, developed by

SportAccord in collaboration with YouTube; free online streaming of the second division of the

64

coverage of free streaming may be limited to the territories where such content is not

sold.188

Major sporting events (such as the Olympic Games and football matches) are generally

recognised as a vital input for the main TV broadcasters. In the free-to-air environment,

sports are a key instrument of differentiation between channels given its unique branding

abilities and its appeal to advertisers. For pay TV, top sports are one of two main

subscription drivers, along with the first screening of major movies.189

In the past, media content providers delivered sport content via one platform, e.g.

analogue TV, DTT, cable or satellite. However, a new trend is to market premium sports

content rights on a platform-neutral basis with rights packages carved out by time

windows (e.g. live, near-live or deferred, highlights, and clip rights). For example, a

licensee who acquires the live rights to certain matches will thus benefit from exclusivity

across all media platforms, including internet and mobile.190

Broadcasting is among the most important source of revenues for premium sports

content. For example, in 2013/14 season the broadcasting revenues of five major

European football leagues ranged from 29.3% to 59% of their total revenues;191

broadcasting represented 77% of UEFA's revenues in 2013/2014 season192

. Broadcasting

revenues amounted to 73% of the International Olympic Committee's revenues in 2009-

2012.193

However, apart from a handful of premium sporting events, most professional

sports struggle to attract significant revenue from selling their broadcasting rights.194

Furthermore, of the total budget for grassroots sport, revenue from media rights allocated

to grassroots sport represents € 0.5 billion (0.7% of the total).195

Spanish football league in 2014. See also ASSER/IVIR Study on sports organisers’ rights in the

European Union, Final Report, February 2014, pages 68-69. 188 For example, European Tour TV, Ryder Cup’s platform, streams for free golf matches. Live streaming

is available only in MS which do not benefit from local broadcasting, i.e. where there is no

broadcaster/service provider who bought the rights to broadcast live events; see

http://www.europeantour.com/europeantour/season=2013/tournamentid=2013038/news/newsid=1933

30.html#7eG3vMYYaEkdTFbl.97 189 See case COMP/M.4066, CVC/SLEC, European Commission decision of 20 March 2006; OECD

Policy roundtables, Competition Issues in Television and Broadcasting, 2013, available at

http://www.oecd.org/daf/competition/TV-and-broadcasting2013.pdf 190 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014. For example, the UEFA sells its broadcasting rights on the platform neutral basis, thus football

fans can follow UEFA football matches also via the internet portals and mobile platforms of the

official broadcasters as well as via the relevant radio stations, see http://www.uefa.org/about-

uefa/administration/marketing/#; Sky Deutschland acquired the exclusive pay-TV rights for all live

Bundesliga and 2nd Bundesliga matches from the 2013/14 to 2016/17 season in Germany, which

covers the rights for all platforms, including online and mobile, see

http://www.broadbandtvnews.com/2012/04/18/sky-deutschland-wins-live-bundesliga-rights/; the

broadcast rights for 2018-2024 Olympic Games in Europe were sold on a multiplatform basis: all

rights on all screens, see http://www.olympic.org/news/ioc-awards-all-tv-and-multiplatform-broadcast-

rights-in-europe-to-discovery-and-eurosport-for-2018-2024-olympic-games/246462 . 191 Premier league (UK) 54%; Bundesliga (Germany) 29.3%, La Liga (Spain) 49%; Serie A (Italy) 59%;

Ligue 1 (France) 40%, see Deloitte Annual Review of Football Finance 2015, available at

http://www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual-review-of-football-

finance.html; Bundesliga Report 2015, page 26. 192 See UEFA Financial Report 2013/14. 193 See IOC Financial Summary, Update – July 2014, available at

http://www.olympic.org/Documents/Reference_documents_Factsheets/IOC_Financial_Summary.pdf 194 See ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February

2014, p 68. 195 Study on the funding of grassroots sports in the EU, June 2011;

http://ec.europa.eu/internal_market/top_layer/services/sport/study_en.htm

65

On the other side, acquiring sports rights makes a substantial part of broadcasters'

expenses. For example, in 2009 out of the EUR 34.5 billion spent in the EU by

broadcasters on the content, approximately EUR 15.6 billion was spent on acquiring

rights, of which EUR 5.8 billion on sports rights196

. In 2011, broadcasters in the top five

European markets spent on average 79% of their annual sports rights expenditure on

football.197

The acquisition of media rights to the domestic football league accounts for

more than half of the total spent. In this context, the second biggest sport is Formula 1,

followed by rugby, the Olympic Games and tennis.198

196 Study on the implementation of the provisions of the Audiovisual Media Services Directive

concerning the promotion of European works in audiovisual media services, 2011, page 99. 197 ASSER/IVIR Study on sports organisers’ rights in the European Union, Final Report, February 2014,

page 64. 198 Ibid, data quoted from Sportbusiness Intelligence (2011).

66

13. ANNEX 5 – NEW TECHNOLOGIES, NEW WAYS OF ACCESS TO AND DISTRIBUTION OF

CONTENT

Digitisation has deeply impacted the ways works and services are consumed. With growing

access to the internet, the use of online services is becoming a part of consumers’ daily life:

81% of households in EU28 have internet access and 83% of EU citizens use internet daily,

and 38% of individuals use the internet for playing or downloading games, images, films or

music199

(see also Table 5.1). VoD services provide viewers with more flexibility when

watching programs, listening to music, reading books or newspapers. Tablets and

smartphones further facilitate such uses. Consequently, consumers increasingly expect to

access content at any time and from anywhere. The Body of European Regulators for

Electronic Communications (BEREC) has estimated that Europeans, who travel at least once

a year, spend abroad on average 11.6 days per year (see also Table 5.2).

Table 5.1: Use of the internet for communication, entertainment and other selected activities, by age group, EU

27, 2012 (% of internet users)

Source: Eurostat200

199

Source: Eurostat 2014 (% of individuals who accessed internet in the last 3 months preceding the Eurostat survey) 200

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-12-050/EN/KS-SF-12-050-EN.PDF

67

Table 5.2: Percentage of citizens who never travel in comparison to those who travel more frequently and the

average number of days abroad for all citizens and citizens who travel at least once a year.

Country Citizens who never travel

Citizens who travel at least once a year

Yearly average days abroad - all citizens

Yearly average days abroad- citizens who travel at least once a year

Austria 10% 66% 11.2 14.3

Belgium 19% 62% 10.9 14.6

Bulgaria 63% 11% 0.9 4.1

Croatia 33% 31% 5.4 12.2

Cyprus 15% 37% 12.1 30.4

Czech 23% 39% 5.1 9.5

Denmark 7% 68% 12.6 16.0

Estonia 27% 41% 6.4 11.8

Finland 14% 48% 11.0 19.7

France 37% 33% 4.0 8.3

Germany 18% 52% 8.9 14.7

Greece 63% 11% 0.8 3.2

Hungary 59% 13% 2.5 15.5

Iceland 36% 35% 5.7 12.4

Ireland 18% 51% 10.9 19.0

Italy 52% 16% 2.2 8.4

Lithuania 52% 22% 5.1 18.4

Luxembourg 4% 86% 27.1 30.1

Netherlands 7% 78% 15.0 17.3

Norway 10% 57% 12.6 19.2

Poland 52% 18% 3.0 12.0

Portugal 61% 14% 1.5 6.3

Romania 57% 17% 1.4 3.5

Slovakia 26% 48% 5.9 8.6

Slovenia 19% 60% 6.9 8.3

Spain 55% 16% 1.8 8.9

Sweden 6% 65% 12.1 15.9

UK 27% 40% 7.6 15.6

EEA Average 36% 35% 5.7 11.6

68

Source : BEREC International Roaming Analysis of the impacts of “Roam Like at Home” (RLAH), 17 December

2014201

During the next 5 years global digital spending on entertainment and media is expected to

increase at a rate of 12.1%, whereas non-digital spending will only increase by 2.8%.202

Digital technology also creates new forms of production and distribution of content, often

making them more efficient and less costly. Some transaction costs decrease (e.g. by more

efficient matching between owners and users; easier monitoring of consumption). Some new

uses (e.g. digitisation of out-of-commerce works) however involve significant costs. There is

also a vast scope for individuals to self-publish, reaching consumers directly online.

The last years have seen a plethora of new services coming into the market. The figures

below illustrate their importance in the EU economy:

The number of licensed digital music services worldwide is steadily growing (about 400 at the end of 2010 and

close to 600 at the end of 2015).203 In the digital music sector, cloud computing and the shift from ownership to

access-based models of consumption is changing the ways in which consumers access digital content, enabling

e.g. subscription to extensive libraries on a streaming rather than download-to-own basis. Although download

sales continue to account for a large part of global digital revenues (52%). The number of paying subscribers

increased by 46.4% globally in 2014 and stands at an estimated 41 million as opposed to 8 million in 2010.

Subscription services now account for the majority of digital revenue in e.g. Croatia, Denmark, Finland, the

Netherlands and Sweden.204 The global digital revenues of the recording industry reached USD 6.85 billion in

2014.205

Online music services in the EU in 2015 (download, subscription and ad-supported services)

Source: www.pro-music.org

In the audiovisual sector, in 2014 there were more than 3000 video-on-demand services in Europe, including

catch-up TV services of broadcasters (1196 services) and VoD services providing access to a catalogue of

programs – without payment, on a transactional basis or through a subscription (2101 services). The number of

users of subscription VoD services in 14 EU MS 206 was 25 million in 2014.207 In 2013 the online on-demand

201 http://berec.europa.eu/eng/document_register/subject_matter/berec/opinions/4826-international-roaming-

analysis-of-the-impacts-of-8220roam-like-at-home8221-rlah 202 PWC, Global entertainment and media outlook: 2012-2016 (PWC 2012),

http://www.pwc.com/us/en/pressreleases/2012/digital-now-embedded.jhtml. “In 2016, 67% of total global

spending on entertainment and media growth will be generated by digital spending” 203 http://www.pro-music.org 204 IFPI Digital Music Report 2015 205 Ibid. 206 AT, BE, DE, DK, ES, FI, FR, IE, IT, LU, NL, PT, SE, UK 207 IDATE Digiworld Yearbook 2015, Audiovisual Observatory and IHS.

0

18

35

53

70

Austria Cyprus Finland Hungary Lithuania Portugal Spain

69

TV revenues reached €938 million and online on-demand film revenues €588 million in the EU.208

VoD film

online accounted for 0.44% of the EU audiovisual market in 2013, growing by almost 60% compared to 2012.

409 film VoD services were established in the EU in 2013, while 124 services of this type were established in

the US, but were targeting European countries.209 With regard to the TV distribution platforms, the number of

IPTV platforms in Europe has increased steadily (from 66 in 2008 to 188 in 2014).210 In 2013, consumers spent

around €1.5 billion on TV and film on demand in Europe.211 Spending on physical video media (DVD/Blue-ray

Disc) amounted to € 5.9 billion, down 11.3% compared to 2012. Digital delivery over the internet is still

generating fairly small revenues but is growing fast. Nevertheless, broadcasters remain, for the time being, the

major distributor of AV content, with 10 800 TV channels available in Europe. Broadcasters’ net revenues

totalled over €71 billion in 2013.212

The online games market is one of the fastest growing markets in recent years and is expected to grow further. In Europe consumer spending on video games is estimated at more than €20 billion in 2015, out of a global

market of €68 billion. The number of active social network game users rose in Europe from 17 million a month

in 2008 to 376 million a month in 2013.213

The acceptance of e-books by EU consumers has increased over the years and this upward trend is likely to

continue. However, revenues from digital titles remain low in comparison to the print books: only 7% of global

digital revenues resulted from the sale of digital titles in Europe whereas Europe is still the biggest book market

on a global level.214 Figures differ amongst Member States: in 2013, it is estimated that the e-book market

accounted for close to 4% of the book market in Germany whereas this figure reached almost 12% in the UK.215

More and more e-books are available and book publishers increasingly offer digital content such as e-books and

apps in addition to print books, thus entering in direct competition with online retail platforms. European citizens

can choose among 2.5 million book titles available in digital format.216 Some platforms still privilege distribution

of content over proprietary networks (so called “walled gardens”) on the internet. Educational publishers217 also

increasingly offer resources (e.g. textbooks) in digital formats throughout the EU.

Sports

The television remains the main medium though which consumers follow sports218

. However,

there is a trend towards mobile/online consumption, which is helped by cross-platform

services offered by broadcasters as well as sports organisers' licensing practices.219

58% consumers in the EU accessed live events (such as sports, concerts, etc.) on line.

Amongst those who reported accessing online live events (including sports), 77% did it via

free streaming and 28% via paid streaming.220

The below graph shows the types of access to digital content by market, over the past year:

live events include sports, concerts, etc.221

208 Audiovisual Observatory 209

Data from European Audiovisual Observatory 210

MAVISE/European Audiovisual Observatory, Yearbook 2011, http://www.obs.coe.int 211

Data from European Audiovisual Observatory 212 European Audiovisual Observatory 213 http://www.isfe.eu/ and IHS 214 Idate report, Digiworld Yearbook 2015. 215 Rudiger Wischenbart, The Global eBook Report, 2013 216 http://www.cmba-alliance.eu/facts-and-figures/ 217 Educational publishing represents between 15 and 20% of the publishing market at EU level. 218 See Global Sports Media Consumption Report 2012, page 4 and Global Sports Media Consumption Report

2014, p. vi and 10-11. The 2014 report covers sixteen global markets, including France, Germany, Italy,

Spain and GB. 219 Traditionally, media content providers delivered their services via one particular platform, e.g. analogue TV,

digital terrestrial TV (DTT), cable TV or satellite TV. However, these services are increasingly migrating

towards distribution platforms that are hybrids of traditional broadcasting and internet (see Annex 4). 220 2015 DSM consumer survey: identifying the main cross-border obstacles to the Digital Single Market and

where they matter most,

http://ec.europa.eu/consumers/consumer_evidence/market_studies/obstacles_dsm/index_en.htm

70

Online sports consumption is growing globally, including in the major European markets.

Namely, in 2014, in France, Germany, Italy, Spain and Great Britain, consuming sports

content online is the second most popular method after TV, attracting between 51-67% of

consumers.222

Of those who consumed sports online, between 44-60% watched live streaming

of games or sport events.223

While consumers increasingly watch sporting events online, many of them cannot watch them

online while travelling in Europe. The below graph show consumers' attempts to access

digital content (films, TV series or live events, including sports) from another EU country.224

The respondents who noted that they had streamed films and TV series or live events in the

last 12 months were subsequently asked if they had tried to access such live events that one

221 2015 DSM consumer survey: identifying the main cross-border obstacles to the Digital Single Market and

where they matter most,

http://ec.europa.eu/consumers/consumer_evidence/market_studies/obstacles_dsm/index_en.htm 222 53% in France, 51% in Germany, 67% in Italy, 67% in Spain and 61% in the UK. See Global Sports Media

Consumption Report 2014. 223 44% in France, 51% in Germany, 47% in Italy, 60% in Spain and 51% in the UK. See ibid. 224 2015 DSM consumer survey: identifying the main cross-border obstacles to the Digital Single Market and

where they matter most;

http://ec.europa.eu/consumers/consumer_evidence/market_studies/obstacles_dsm/index_en.htm

71

can normally view in their country of residence from abroad. Of the 38% of respondents who

streamed live events (e.g. sports matches) in the last 12 months and tried to access streaming

services of their own country while abroad, 51% reported not being able to access them. 39%

reported that they were not allowed by the content provider, 35% that they were not allowed

by the internet service provider and a further 26% that it did not work for 'another reason'.

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14. ANNEX 6 – INTERNATIONAL AND EUROPEAN LEGAL FRAMEWORK

EU legal framework

Directive 2001/29/EC (the "InfoSoc Directive") was designed to update copyright rules to the

(then nascent) digital networks and to implement the two 1996 WIPO225

Internet Treaties - the

WIPO Copyright Treaty (WCT)226

and the WIPO Performances and Phonograms Treaty

(WPPT).227

It harmonises several exclusive rights and exceptions that are essential to the

online dissemination of works and other protected subject-matter. The Directive has to be

read in conjunction with all other Copyright Directives,228

in particular, in terms of the

definition of rights and of exceptions, it has to be read together with Directive 96/9/EC (the

“Database Directive”), Directive 2009/24/EC (the "Software Directive"), Directive

2006/115/EC (the "Rental and Lending Directive") and Directive 2012/28/EU (the “Orphan

Works Directive”). Remedies against infringements of intellectual property rights are

foreseen in Directive 2004/48/EC on the enforcement of Intellectual Property rights

(“IPRED”).

As regards the broadcasting of TV and radio programmes, Directive 93/83/EEC (the "Satellite

and Cable Directive") aims to facilitate the clearing of copyright and related rights for cross-

border satellite broadcasting and cable retransmission services.

Many of the copyright directives reflect the obligations of MS under the Berne Convention,

and the Rome Convention, and of the EU and its MS under the WTO TRIPS Agreement and

the 1996 WIPO Internet Treaties.

All these Directives have as their objective and their legal bases229

the establishment and

functioning of an internal market, notably as regards the free movement of goods and services

which consist of or contain works and other protected subject-matter.

The shift of content distribution from goods to services provided over digital networks and

with a potential cross-border reach makes it increasingly important to interrelate the existing

copyright rules with the rules applicable in the area of services in the internal market, notably

Directive 2000/31/EC (the "E-commerce Directive"), which sets the rules applicable to the

provison of online services in the internal market and also contains provisions which are

relevant for the exercise and the enforcement of copyright, Directive 2006/123/EC (the

"Services Directive") which sets the rules applicable to the provision of services in the

internal market and Directive 2010/13/EU (the "Audiovisual Media Services Directive" or

"AVMS Directive") which sets the rules applicable to the provision of AV services in the

internal market.

As regards sports, the acquisition and transfer of broadcasting rights to sporting events are

governed by national law, subject to the applicable EU rules, such as competition (Articles

101 and 102 TFEU). Article 14(1) of the AVMS Directive establishes a possibility for MS to

ensure that certain sporting events of "major importance for society" would be shown on free

TV. Furthermore, and in the light of the European Convention on Transfrontier Television

(ECTT), Article 15 of the AVMS Directive introduces the right to short reporting of major

events, which includes sports.

225 World Intellectual Property Organization, http://www.wipo.int 226

http://www.wipo.int/treaties/en/ip/wct/ 227 http://www.wipo.int/treaties/en/ip/wppt/ 228

http://ec.europa.eu/internal_market/copyright/acquis/index_en.htm 229 Article 114 TFEU as well as Articles 50, 53 and 62 TFEU.

73

Moreover, the above-described legal framework complies with the obligation of the EU to

take cultural diversity aspects into account in its actions230

and the UNESCO Convention on

the protection and the promotion of the diversity of cultural expressions, to which the EU is a

Party, recognises the importance of intellectual property rights in sustaining those involved in

cultural creativity.

Finally, in the last years, the CJEU has developed a substantive body of case law interpreting

the provisions of the above mentioned rules as well as their relation to the free movement of

services principle established in the Treaty.

International treaties

Berne Conventin for the Protection of Literary and Artistic Works

WIPO Copyright Treaty (WCT)

Rome Convention for the Protection of Performers, Producers of Phonograms and

Broadcasting Organizations

Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication

of Their Phonograms

WIPO Performances and Phonograms Treaty (WPPT)

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

Beijing Treaty on Audiovisual Performances (not in force)

Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind,

Visually Impaired or Otherwise Print Disabled (not in force)

UN Convention on the Rights of Persons with Disabilities (UNCRPD)

EU legislation

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the

harmonisation of certain aspects of copyright and related rights in the information society, OJ

L 167, 22.6.2001, p.10. ("InfoSoc Directive")

Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006

on rental right and lending right and on certain rights related to copyright in the field of

intellectual property, OJ L 376, 27.12.2006, p. 28. ("Rental and Lending Directive")

Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001

on the resale right for the benefit of the author of an original work of art, OJ L 272,

13.10.2001, p. 32. ("Resale Right Directive")

Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules

concerning copyright and rights related to copyright applicable to satellite broadcasting and

cable retransmission, OJ L 248, 6.10.1993, p. 15. ("Satellite and Cable Directive")

Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the

legal protection of computer programs (Codified version), OJ L 111, 5.5.2009, p. 16–22.

(“Software Directive”)

Directive 2004/48/EC of the European Parliament and of the Council on the enforcement of

intellectual property right, OJ L 157, 30.4.2004, p. 45–86. (“IPRED”)

230 Article 167(4) TFEU

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Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the

legal protection of databases, OJ L 77, 27.3.1996, p. 20–28. (“Database Directive”)

Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006

on the term of protection of copyright and certain related rights (codified version), OJ L 372,

27.12.2006, p. 12–18. (“Term Directive”)

Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011

amending Directive 2006/116/EC on the term of protection of copyright and certain related

rights, OJ L 265, 11.10.2011, p. 1-5. (“amended Term Directive”)

Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on

certain permitted uses of orphan works, OJ L 299, 27.10.2012, p. 5-12. (“Orphan Works

Directive”)

Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on

collective management of copyright and related rights and multi-territorial licensing of rights

in musical works for online use in the internal market, OJ L 84, 20.3.2014. p. 72-98. (“CRM

Directive”)

Regulation (EC) N° 44/2001 on jurisdiction and the recognition and enforcement of

judgements in civil and commercial matters (to be replaced as of 10 January 2015 by

Regulation 1215/2012)

Regulation (EC) N° 593/2008 on the law applicable to contractual obligations

Regulation (EC) N° 864/2007 on the law applicable to non-contractual obligations and

Regulation (EC) N° 1206/2001 on cooperation between Member States in the taking of

evidence in civil or commercial matters

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on

certain legal aspects of information society services, in particular electronic commerce, in the

Internal Market, OJ L 178, 17.7.2000, p. 1–16 ("E-commerce Directive")

Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006

on services in the internal market, OJ L 376, 27.12.2006, p. 36–68 ("Services Directive")

Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on

the coordination of certain provisions laid down by law, regulation or administrative action in

Member States concerning the provision of audiovisual media services, OJ L 95, 15.4.2010,

p. 1–24 ("Audiovisual Media Services Directive")

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15. ANNEX 7 – EXAMPLES OF ACCESS OR USE RESTRICTIONS IN TERMS OF SERVICES BY

ONLINE CONTENT PROVIDERS

Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

Audiovisual and sports content providers

iTunes

www.apple.com/itunes Type: VOD – streaming, downloads

Devices: PC, tablet, smartphone, Smart TV

Business model: paid - transactional (payment

for a film)

Requirements for registration: subscriber's

data, credit card

Each iTunes store is available

in the territory "covered" by the

store. E.g. the Belgian iTunes

store is only available in

Belgium and cannot be used

abroad – IP address check.

Sky Now

www.nowtv.com

Type: Live simulcasting and VOD -

streaming

Devices: PC, tablet, smartphone, Smart TV

Business model: paid - subscription

Requirements for registration: subscriber's

data, credit card

Available only to residents of

UK accessing the service from

the territory of UK – IP address

check.

MyTF1

www.mytf1vod.tf1.fr

Type: VOD - streaming

Devices: PC

Business model: paid - transactional (payment

for a film)

Requirements for registration: subscriber's

data (credit card details upon first payment)

Available only to residents of

France accessing the service

using French IP address – IP

address check.

CanalPlay

www.canalplay.com

Type: VOD - streaming, downloads

Devices: PC, tablet, smartphone, Smart TV

Business model: paid - subscription (access to

a general catalogue) and transactional

(payment for a film)

Requirements for registration: subscriber's

data, credit card

Available only to residents of

France accessing the service

from the territory of France –

IP address check.

Maxdome

www.maxdome.de

Type: Live simulcasting and VOD -

streaming, downloads

Devices: PC, tablet, smartphone, Smart TV

Business model: paid - subscription (access to

a general catalogue) and transactional

(payment for a film)

Requirements for registration: subscriber's

data, means of payment

Available only to users

accessing the service from the

territory of Germany – IP

address check.

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Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

RTL Now TV

www.nowtv.de/rtl

Type: Live simulcasting of TV channels and

VOD (catch-up TV) – streaming

Devices: PC, tablet, smartphone, Smart TV

Business model: paid and unpaid depending

on content

Requirements for registration: subscriber's

data

Service restricted in principle to

users accessing it from the

territory of Germany. Not all

videos are available outside

Germany – IP address check.

Magine TV Germany

https://magine.com/de

Type: Live simulcasting of TV channels and

VOD (catch-up TV) – streaming

Devices: PC, tablet, smartphone, Smart TV

Business model: paid and unpaid depending

on content

Requirements for registration: subscriber's

data

Available only to users residing

in and accessing the service

from the territory of Germany –

IP address check.

Universciné

www.fr.universcine.be

Type: VOD - streaming, downloads

Devices: PC, tablet, smartphone – 5 devices

maximum

Business model: paid – transactional

(payment for a film)

Requirements for registration: subscriber's

data

Available only to residents of

Belgium accessing the service

from the territory of Belgium –

IP address check.

Proximus TV Partout

www.proximus.be/en/id_cr_

everywhere/personal/our-

products/television/tv-

experience/tv-partout.html

Type: Live simulcasting of TV channels and

VOD (catch-up TV) - streaming

Devices: PC, tablet, smartphone

Business model: paid - subscription

Requirements for registration: subscriber's

data

Available only to subscribers of

Proximus TV (IPTV service).

Available only via the fixed and

mobile networks of Proximus.

Available only to users

accessing the service from the

territory of Belgium – IP

address check.

Filmin

www.filmin.es Type: VOD – streaming, downloads

Devices: PC, tablet, smartphone, Smart TV

Business model: paid - subscription (access to

a general catalogue) and transactional

(payment for a film to get access for 72

hours)

Requirements for registration: subscriber's

data (credit card details upon first payment)

Streaming service available

only to users in the territory of

Spain – IP address check.

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Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

Filmotech

www.filmotech.com Type: VOD – streaming

Devices: PC, tablet, smartphone. Up to 5

different IP addresses allowed per user

Business model: paid - subscription (access to

a general catalogue) and transactional

(payment for a film to get access for 48

hours)

Requirements for registration: subscriber's

data

No restrictions linked to

territory are mentioned.

Mediaset Infinity

www.infinitytv.it

Type: VOD - streaming

Devices: PC, tablet, smartphone, Smart TV –

5 devices maximum

Business model: subscription (access to a

general catalogue) and transactional (payment

for a film)

Requirements for registration: subscriber's

data, fiscal code, means of payment

Available only to users

accessing the service from the

territory of Italy – IP address

check.

ChiliTV

http://it.chili.tv/

Type: VOD - streaming, downloads

Devices: PC, tablet, smartphone, Smart TV

Business model: paid and unpaid (limited

service), depending on content; paid -

transactional (payment for a film)

Requirements for registration: subscriber's

data, means of payment (for paid service)

Italian residence is a condition

to set up an account – IP

address check. The use of

certain content can be limited to

certain devices.

Onet VoD

www.vod.pl

Type: VOD - streaming

Devices: PC

Business model: paid and unpaid depending

on the content

Requirements for registration: subscriber's

data, credit card

Available only to users in the

territory of Poland – IP address

check. Service may allow

access to specific content also

to users having other IP address

than Polish.

Voyo Bulgaria

www.voyo.bg

Type: VOD - streaming

Devices: PC, tablet, smartphone, Smart TV

Business model: subscription (access to a

general catalogue) and transactional (payment

for a film)

Requirements for registration: subscriber's

data (credit card details upon first payment)

Available only to users

accessing the service from the

territory of Bulgaria – IP

address check.

Nova Play

www.play.novatv.bg

Type: VOD (catch-up TV) - streaming

Devices: PC, tablet, smartphone

Business model: unpaid

Requirements for registration: registration not

compulsory but gives access to more

functionalities

Not all videos are available

outside Bulgaria – IP address

check.

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Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

Music providers

Spotify

www.spotify.com

Type: streaming, temporary downloads (for

offline use)

Devices: PC, tablet, smartphone

Business model: unpaid (limited service) and

paid (subscription)

Requirements for registration: subscriber's

data

Non-paying users can use the

service abroad for 14 days; this

time limit does not apply to

subscribers.

Apple Music

www.apple.com/music/

Type: streaming, temporary downloads (for

offline use)

Devices: PC, tablet, smartphone

Business model: unpaid (limited service) and

paid (subscription)

Requirements for registration: subscriber's

data

The service is available in the

territory "covered" (e.g.

Belgium) and cannot be used

abroad.

7digital

https://es.7digital.com

Type: downloads

Devices: PC, tablet, smartphone – 5 devices

maximum

Business model: paid - transactional (payment

for a track)

Requirements for registration: subscriber's

data

The content may be limited to a

territory. For this type of

content, the user shall provide

his or her billing information

related to that territory. The

user accepts the terms and

conditions related to territorial

restrictions.

Rdio

www.rdio.com

Type: streaming, downloads

Devices: PC, tablet, smartphone

Business model: unpaid (limited service) and

paid (subscription)

Requirements for registration: subscriber's

data

Songs available in any

particular territory will depend

upon the rights Rdio obtains

with respect to that territory,

and, accordingly, not all songs

will be available in all

territories.

Napster

http://de.napster.com/

Type: streaming, downloads (for offline use)

Devices: PC, tablet, smartphone

Business model: paid (subscription)

Requirements for registration: subscriber's

data and means of payment

The user has to declare that

she/he is residing in one

Member State of the EU, from

which she/he registers to the

service or uses the service.

Tidal.com

http://tidal.com/

Type: streaming, temporary downloads (for

offline use)

Devices: PC, tablet, smartphone

Business model: paid (subscription)

Requirements for registration: subscriber's

data

The service shall not be used in

any manner that may violate the

restrictions applicable to the

utilization of the service,

including failing to respect

applicable geographic/territorial

restrictions.

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Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

Music me

www.musicme.com

Type: streaming, downloads

Devices: PC, tablet, smartphone

Business model: unpaid and paid –

subscription and transactional (payment for a

track)

Requirements for registration: subscriber's

data and means of payment (for paid service)

The service is offered in France

only. Means of payment

required is a credit card issued

on the French territory

Starzik

www.starzik.com

Type: downloads

Devices: PC

Business model: paid – subscription and

transactional (payment for a track)

Requirements for registration: subscriber's

data and means of payment

The service is reserved to

clients living on the French

territory or in specific

territories authorized by Starzik

at the date of purchase AND

having a credit card issued in

France

eMusic

www.emusic.com

Type: downloads

Devices: PC, tablet, smartphone

Business model: paid – transactional

(payment for a track)

Requirements for registration: subscriber's

data

eMusic derives its rights to use

the media offered on the

Service from artists and record

labels, publishers and other

third parties for fixed periods of

time and, sometimes, for

limited territories. As well,

eMusic is sometimes required

to pull certain media off the

Service (or otherwise restrict

access to such media) for legal

or commercial reasons.

Therefore, certain media

offered or advertised by eMusic

may not be available when you

try to download, and not all

media are available in all

countries.

Akazoo

www.akazoo.com

Type: streaming, downloads

Devices: PC, tablet, smartphone

Business model: paid (subscription)

Requirements for registration: subscriber's

data and means of payment

Content may be restricted by

territory of Akazoo access, as

determined by the IP address.

The user agrees not to

circumvent any territorial

restrictions in place on the

Services or use any methods

altering or prevaricating the IP

address when accessing the

Services.

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Name of the service/ web

address Main features Access/use restrictions

(according to the terms of

use)

Pakartot

www.pakartot.lt

Type: streaming

Devices: PC, tablet, smartphone

Business model: unpaid, can be used without

registration (registration gives access to

certain features, e.g. making playlists)

Requirements for registration: subscriber's

data

None

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16. ANNEX 8 – TECHNOLOGIES FOR DELIVERING ONLINE CONTENT SERVICES

Content Distribution/Delivery Networks (CDNs), Adaptive Bit Rate (ABR) and Peer-to-

Peer (P2P)

When content is delivered from a content provider to a content consumer, there are two

important techniques used to increase the Quality of Experience of the consumer: Content

Distribution/Delivery Networks (CDNs) and Adaptive Bit Rate (ABR) streaming. Both

techniques are generally independent; in particular a CDN is not necessary to provide ABR

streaming. However, CDNs can provide streaming services with ABR. Further, ABR

streaming is a technique necessary/useful only for live streaming of video (not necessarily

live video). ABR is briefly explained here for the sake of clarity. It does not have a cost

impact in the context of geo-blocking, but can be used to provide a best-effort service to a

user outside the usual target territory.

A third technique is Peer-to-Peer (P2P) but it is a niche technology for commercial content

distribution. The fact that the devices on which the content is displayed are portable, such as a

tablet or a smartphone, or fixed, such as a connected TV or a computer, does not have a big

impact on these processes, in particular as fixed devices increasingly use the same local Wi-Fi

connection (portable devices have lower requirements for quality and corresponding bit rate

parameters).

Adaptive Bit Rate (ABR) streaming

If a video is streamed from a server to a content consumer, the bitrate of the video is an

indicator for the Quality of Experience of the consumer: for the same video codec a higher bit

rate generally means higher quality. But at the same time, the bitrate is also proportional to

the bandwidth necessary to stream the video to the consumer. If now the bandwidth between

server and consumer is not sufficient and the bitrate remains constant, the buffer at the

consumer device will run empty and the video will stall which is known to cause high

customer dissatisfaction. Therefore, ABR streaming adapts the used bitrate to the available

bandwidth based on some feedback mechanism between content consumer and content

provider server. If the feedback mechanism signals that the buffer fill at the consumer device

decreases due to lack of bandwidth, the server then switches to a lower bitrate to alleviate the

problem. This of course leads to a decreased image quality at the consumer device, but avoids

stalling and usually consumers are more readily willing to accept slightly reduced image

quality than stalling. The bitrate is usually fixed for a segment of the video of – depending on

the implementation – a duration of two to ten seconds, but in principle each segment can be

streamed at a different bitrate. Like that the streaming server can also adjust itself to different

end devices since it makes a difference whether it streams to a laptop connected via a vDSL

connection or a mobile device connected via the mobile network.

Content Delivery Networks (CDNs)

The purpose of CDNs is the fast and efficient delivery of content from content providers to

content consumers. In principle, all content could be delivered directly from the origin server

at a single location under the control of the content provider. However, in practice this

reaches scalability limits and produces quality problems for widely consumed (both in terms

of number of consumers and in terms of geographic spread of consumers) content. For

instance, the capacity of the origin server needs to be very high, which is expensive; the

bandwidth of the connection between the server and the Internet needs to be very high and

sufficient capacity may not even be available; and finally, a lot of traffic is duplicated

82

unnecessarily on network links causing network congestion. The latter point can be illustrated

as follows: let's assume a content provider with its origin server in Germany. If consumer A

from Portugal accesses content from this provider, the content is sent from some point in

Germany to some point in Portugal. If now consumer B from Portugal accesses the same

content from this provider, the content is sent once again all the way from Germany to

Portugal while it would have been much more efficient to replicate the content on a server in

Portugal and serve consumers A and B directly from there. In this simple example the

replication of content in Portugal reduces the traffic roughly by 50%.

And this is exactly what CDNs are doing: they replicate content at different (geographic)

locations for more efficient delivery. Next to the points mentioned above, placing content as

close as possible to the consumer also reduces delay and generally makes the quality of

delivery more predictable.231

So a CDN is a collection of interconnected servers at different locations that replicate content

and deliver it to consumers. It is important to place the servers well in different regions, but

also for instance within a region inside different ISPs or at the peering point of different ISPs

in order to avoid unnecessary peering traffic between ISPs. CDNs can be private, i.e., the

content provider has its own CDN, or they can be bought as a service from a CDN service

provider. Operating a private CDN only makes sense for very big content providers: CDN

service providers often can offer the service cheaper due to economy of scales when

providing the distribution service to many content providers at the same time. As an example,

Akamai is amongst the best known and world’s largest CDN providers and serves – according

to estimates – between 15 to 30 percent of all web traffic.

Technology in a nutshell

A content provider offers at its origin server content on some sports event under

www.provider.eu/sports/sports.html including a video 'sportsvideo.mpg' which is replicated

inside a CDN. If a consumer requests this content, the request for the information

www.provider.eu/sports/sports.html first goes to the origin server, but the request for the

video itself is then redirected by the origin server inside the above HTML-file to

www.cdn.com/www.provider.eu/sports/sportsvideo.mpg. Now the CDN provider receives the

request, selects inside its CDN a suitable server which can serve the consumer best and

delivers the video. The selection is actually done by the CDNs authoritative DNS server232

based on a map of distances between its own servers and individual ISPs. So it returns the IP

address of its server which is closest to the ISP of the consumer.

In short, the first request goes to the content provider and the content provider redirects to the

CDN. In particular it could decide to not redirect to the CDN for specific customers. Hosting

files in a CDN works for big files such as for software distribution, video on demand, but also

for live video, the latter being the most demanding case.

Peer-to-peer (P2P) networks can also be used to distribute content. In this case, all consumers

host parts of the file(s) – so called chunks - to be distributed and share it amongst themselves

231 Please note in that context that "close to the user" is not necessarily meant geographically only. The closest

server to a consumer out of couple of possible servers also might be the one with the best connection to the

consumer. 232 The Domain Name System (DNS) server translates requests for domain names into actual IP addresses, in

this case www.cdn.com into the IP address of the specific server inside the CDN which is supposed to serve

the request.

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according to some distributed algorithms underlying the P2P network. P2P networks became

well known due to their use for file-sharing music pirate sites a while ago, but, e.g., the BBC

also used it originally in the design of its iPlayer. The BBC gives lacking server performance

and very high distribution costs as the reasons for this decision at that time and of course P2P

networks are very cost efficient since the content provider does almost not have to invest in a

server infrastructure. However, in 2009 the BBC abandoned the P2P technology since

downloaded files contributed only 10% to their overall traffic, which mainly consisted in

(live) video streaming, for which P2P networks are not very suitable. Consequently, today

P2P networks are rather a niche technology for content distribution.

The future of CDNs

Some telecommunication service providers have started to operate their own CDN. A clear

advantage is that telcos can bring content even closer to the end user than traditional CDN

service providers can. A clear advantage for the teleco itself is that such a telco CDN enables

them to better manage and control the traffic in their network. However, depending on the

size of the telco, such a telco CDN has very limited reach, which lead to standardization

efforts for CDN federation, i.e., interconnection of CDNs, and contrasts with the current

proprietary nature of CDNs. In how far this will change the CDN world so that maybe also

small content providers could more easily profit from CDN technology is yet to be seen.

What could happen when geo-blocking is lifted? What would work differently and where

could additional costs occur?

Scenario: A German content provider focused on the German market has a contract with a

CDN provider for Germany. So far content consumers outside Germany were blocked. If now

consumers access from, e.g., Portugal, the following options exist:

Option a: When the request arrives from the consumer in Portugal, the origin server localizes

the consumer outside Germany and decides to serve the consumer directly, i.e., without

redirection to the CDN. The advantage is that the CDN contract is not touched upon,

however, the quality may decrease since the path of delivery is longer with less foreseeable

behaviour, in any case the quality will not be predictable – ABR might help to alleviate the

effects. Costs arise if the server performance has to be increased or the contract with the ISP

for the Internet connection of the origin server has to be upgraded in terms of bandwidth or

traffic volume between the content provider and the ISP. The ISP itself might encounter

unforeseen peering traffic with other ISPs. However ISPs should not be able to block or slow

down traffic of the content provider because of such possible increase in peering traffic. In

any case, the effects should be manageable in terms of costs, unless there is a massive

increase in consumers outside Germany, which then could probably be monetized.

Option b: When the request arrives from the consumer in Portugal, the origin server localizes

the consumer outside Germany, but still redirects the request to the CDN. The CDN serves

the consumer from its server which is best located towards this consumer, but since the

contract with the content provider may be limited to Germany, this server is probably also not

optimally placed and quality might be decreased due to similar reasons as above – ABR might

again help to alleviate the effects. Additional costs may occur if the contract with the CDN

provider is – for instance – volume based and the customers outside Germany have a

noticeable impact on this contract.

Option c: The content provider wants to serve all over Europe to its customers with optimal

quality and thus extends its CDN contract.

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17. ANNEX 9 - GLOSSARY

"Creative industries": they include services such as publishing activities (books, periodicals

and software), motion pictures, video and television programme production, sound recording

and music publishing activities, programming and broadcasting activities, computer

programming, architectural and engineering services, advertising, design activities,

photographic activities, translation and interpretation activities, creative, arts and

entertainment activities.

"Content industries": the creative industries and the sports industries.

"Copyright and related rights": copyright is vested in authors whereas related rights are

vested in performers, phonogram (i.e. record) and film producers as well as broadcasting

organisations. Copyright and related rights include so-called "economic rights" which enable

rightholders to control (license) the use of their works and other protected subject matter (i.e.

performances, phonograms, audiovisual productions and broadcasts) and to be remunerated

for their use. These rights normally take the form of exclusive rights and include (among

others): the right to copy or otherwise reproduce any kind of work and other protected subject

matter; the right to distribute copies to the public and the right to communicate to the public

performances of such works and other protected subject matter. These rights are, to a large

extent, harmonised at the EU level. They can be managed directly by the original rightholder

(e.g. the author of a book) or by those to whom the rights have been transferred (e.g. a book

publisher). They can also be managed collectively by a collecting society. Authors are also

granted so called "moral rights" (these are normally not granted to rightholders protected by

related rights though some legislations provide for moral rights for performers). Moral rights

may include the right to decide on disclosure of the work; the right to claim authorship of the

work and the right to object to any derogatory action in relation to the work. Moral rights are

not harmonised at the EU level.

"Work": creative output of authors protected by copyright. It includes: literary (books, lyrics,

etc.), dramatic (plays, opera librettos, etc.), musical and artistic (photography, painting, etc.)

works.

"Other protected subject-matter": output of holders of related rights i.e. performers,

phonogram and film producers and broadcasting organisations.

"Commercial users" or “service providers”: any person or entity involved in the provision

of goods or services who for its activities needs a licence from rightholders of copyrights

and/or related rights.

"Collective management organisations (CMOs) ": organisations traditionally set up by

rightholders at national level and whose sole or main purpose is to manage copyright or

related rights on their behalf.

“Three-step test”: Copyright exceptions may only be applied in certain special cases which

do not conflict with a normal exploitation of the work or other subject-matter and do not

unreasonably prejudice the legitimate interests of the rightholder.

"Collective rights management": means the provision of the following services: the grant of

licences to commercial users, the auditing and monitoring of rights, the enforcement of

copyright and related rights, the collection of royalties and the distribution of royalties to

rightholders.

"Repertoire": the sum of the rights of all rightholders that a collecting society directly

represents.

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"Reproduction right": the right to authorise or prohibit direct or indirect, temporary or

permanent reproductions of a work or other protected subject matter by any means and in any

form, in whole or in part (Article 2 of the InfoSoc Directive).

"Distribution right": the right to authorise or prohibit any form of distribution to the public

of the original or copies of a work or other protected subject matter by sale or otherwise

(Article 4 of the InfoSoc Directive and Article 9 of the Rental and Lending Directive).

"Right of communication to the public": the right to authorise or prohibit any

communication to the public of a work or other protected subject matter by wire or wireless

means (includes acts such as broadcasting). Recognised as a broad exclusive right

encompassing the making available right (see below) to authors (Article 3(1) of the InfoSoc

Directive); of a more limited scope for other rightholders (Article 8 of the Rental and Lending

Directive).

"Right of making available": the right to authorise or prohibit the making available to the

public of a work or other protected subject matter in such a way that members of the public

may access them from a place and at a time individually chosen by them (Article 3 of the

InfoSoc Directive).

"Rental and lending right": the right to authorise or prohibit the rental or lending of the

original or copies of a work or other protected subject matter (Article 3 of the Rental and

Lending Directive).

"Music publisher": music publishers market musical works and provide authors with a

number of other services. Publishers usually track various royalty payments, monitor uses and

license certain uses on behalf of authors. They often pay the author an advance on royalties

and promote the work, e.g. by creating "demo" recordings or finding performers and record

producers which might be interested in the work. In return, publishers obtain a share of

royalties from rights and/or a transfer of certain rights e.g. mechanical rights.

"Record producer" (also referred to as "phonogram producer”): record producers take the

initiative and arrange the recording of music performances as well as the marketing and

distribution of those recordings.

"Sports organiser": an entity who is entitled to exploit economic rights into sporting events,

including rights to organise or authorise recording of sporting events and to broadcast or

authorise broadcasting of such recordings.

"Premium sports content": content which is considered as a vital input for broadcasting

services because they attract substantial audiences and thus generate substantial revenues for

sports organisers. While certain sporting events are globally considered as "premium content"

because they attract mass audiences (e.g. Olympic Games or certain football matches), there

are also significant differences depending on national preferences (e.g. tennis, rugby or

Formula 1 events are considered as premium content in some countries and generate

significant audiences as well as substantial revenues for sports organisers, while in others they

do not).